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Swiss regulator FINMA has published guidance on stablecoin issuers, urging them to verify the identity of all persons holding digital tokens pegged to fiat currencies.
The Swiss Financial Market Supervisory Authority has published new guidance addressing the risks and challenges associated with stablecoins for issuers and banks providing guarantees. In the Jul. 26 guidance, the regulator underscored the necessity for stablecoin issuers to verify the identities of token holders and beneficial owners to mitigate these risks.
“[…] the identity of all persons holding the stablecoins must be adequately verified by the issuing institution or by appropriately supervised financial intermediaries.”
FINMA
Addressing the banking sector, FINMA noted that the acceptance of public deposits in exchange for stablecoins often requires a banking license. However, default guarantees provided by financial lenders can exempt issuers from this requirement under certain conditions. Therefore, in a bid to protect depositors, FINMA has developed minimum requirements for the applicability of the exception for default guarantees.
For instance, in the event of the bankruptcy of the stablecoin issuer, “each customer must have their own claim against the Swiss bank issuing the default guarantee.” Additionally, the default guarantee “must cover at least the total of all public deposits including any interest earned by customers,” the guidance reads.
FINMA’s guidance also referenced a Federal Council report, which addresses regulatory issues in the financial sector, noting the need for action to address regulatory gaps in the stablecoin industry, although specific details were not provided.
In Switzerland, stablecoins currently operate under the standard legal framework for financial services rather than having a dedicated regulatory framework. They are generally classified either as deposits under banking law or as collective investment schemes, depending on the management of the underlying assets.
This article first appeared at crypto.news
