The Swiss financial regulator has issued fresh guidelines for fintech startups, giving leeway to licensees to accept up to CHF100 million ($100.1 million) in public deposits, in a radical move designed to boost innovation in the sector.
The move comes as part of the new Banking Act, which has been designed in part to create more favourable conditions for fintech businesses, including expanding the options for crowd-lending models within a regulatory sandbox environment.
The guidelines are part of a wider strategy of supporting the crypto sector by the Federal Council of the Swiss Financial Market Supervisory Authority, which aims to boost Switzerland’s profile as a global destination for crypto and fintech startups.
Crucially, the new guidelines give crypto businesses the ability to accept deposits from the public without the need for the same authorisations as a bank, enabling them to explore innovative models without the full range of compliance expectations.
According to a statement from FINMA, which will oversee firms in the regulatory sandbox and is responsible for issuing the new licenses, the measures will begin to come into effect at the turn of the year. It explained, “With the new measure, companies with special authorisation can accept public funds of up to CHF100 million from 1 January 2019, provided they neither invest nor pay interest on these funds.”
The statement goes on to reference amendments to the Bank Ordinance (BankO), which will come into force in April 2019, noting, “In the BankO, the sandbox will additionally be extended to include crowdlending business models, whereby public funds up to a total amount of CHF1 million can one day be brokered not only for commercial and industrial purposes but also for private consumption.”
The fintech license is aimed at startups looking to explore models of taking deposits, without investing or paying interest on those deposits.
The policy is designed to help cement the reputation of Switzerland and the city of Zug as a haven for cryptocurrency innovation, with an already established and booming crypto sector in the country.
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The situation in Switzerland got a whole lot more difficult for cryptocurrency and banking in general, as the Swiss Financial Market Supervisory Authority (FINMA) is getting tough on those banks who want to trade in crypto assets.
On Monday, Swissinfo.ch reported that the financial regulator has described its stance on how financial institutions should weigh crypto assets.
In a letter to EXPERTsuisse, a copy of which was obtained by the Swiss news outlet, FINMA noted that banks and securities dealers should assign “a flat risk weight of 800% to cover market and credit risks” against crypto assets. This means that with the current BTC price of $6,000, institutions would have to value the coin at no less than $48,000 as a buffer level. EXPERTsuisse is a group representing Swiss trustees and accountants.
The guidance is on the high end of the range and on the level of hedge funds, according to the report, meaning FINMA considers crypto assets to be volatile.
Swissinfo.ch reported that FINMA has also set the crypto-trading cap at 4% of a bank’s total capital, noting that banks must report to the authority if they reach that upper limit.
While the letter offers insight into the regulator’s stance and outreach on this issue, it hasn’t yet released official rules for how Swiss banks should deal with cryptocurrencies under the Basel III international banking regulations, according to the report. The financial regulator has already issued an official guidance for initial coin offerings (ICOs) in February, after it received a number of enquiries on the matter.
At the time, FINMA said the applicability of regulation to cryptos would be determined on a case-by-case basis—a stance that is similar to the one taken by the U.S. Securities and Exchange Commission (SEC) in July.
According to FINMA, “asset tokens” fall under securities, meaning there are securities and civil law requirements for trading such tokens. It noted, “FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements under the Swiss Code of Obligations.”
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