The Swiss regulator FINMA advises stablecoin issuers to verify the identity of all holders of fiat-linked digital tokens.
The Swiss Financial Market Supervisory Authority has released new guidelines that address the risks and difficulties related to stablecoins for issuers and banks offering guarantees.
The regulator emphasized in the guidance released on July 26 that stablecoin issuers must confirm the names of token holders and beneficial owners to reduce these risks. FINMA:Â
“[…] the identity of all persons holding the stablecoins must be adequately verified by the issuing institution or by appropriately supervised financial intermediaries.”
Speaking to the banking industry, FINMA pointed out that a banking license is frequently needed to accept deposits from the general public in return for stablecoins. However, financial lenders’ default guarantees may, under some circumstances, release issuers from this obligation.
Consequently, FINMA has created minimal standards for the applicability of the default guarantee exemption to safeguard depositors. For example, “each customer must have their own claim against the Swiss bank issuing the default guarantee” if the stablecoin issuer files for bankruptcy.
Furthermore, according to the guidelines, the default guarantee “must cover at least the total of all public deposits, including any interest earned by customers.” Although specifics were not given, FINMA’s guidelines also cited a Federal Council report that covers regulatory challenges in the financial sector and notes the need for action to close regulatory loopholes in the stablecoin market.
Stablecoins are currently governed by the ordinary legal framework for financial services in Switzerland, as opposed to a separate regulatory system. According to banking legislation, they are typically categorized as either deposits or collective investment schemes, depending on how the underlying assets are managed.
