Demystifying blockchain regulation in Switzerland

Author: IFLR Correspondent | Published: 10 Mar 2020

Innovation in distributed ledger technology will be balanced with investor protection under proposed new rules

On February 16 2019, the Swiss Financial Market Supervising Authority (FINMA) was the first regulator to release guidelines on how to treat blockchain-based coins issued in an initial coin offering (ICO) on February 16, 2019. Finma generally distinguished between asset, payment, and utility tokens while acknowledging that hybrid forms may exist. Practice has shown that tokens issued are very likely to fit more than one single category. Consequently, the relevant issuer would be required to follow all applicable rules. While some regulators and commentators argue that all tokens were securities, Finma emphasised that it would not qualify tokens as securities unless their functionality was similar to traditional securities. Regardless of the ICO guidelines, uncertainties have remained. In particular, it remained unclear if and to what extent existing regulation applies to the underlying business models....