Eternity Law International News Regulation of ICO in Switzerland

Regulation of ICO in Switzerland

Published:
May 14, 2018

February 16, 2018 The Financial Markets Supervision Service of Switzerland (FINMA) has published a survey and legal recommendations for the organizers of the ICO.

In particular, the Service rightly points out that the law and regulation of the financial market can not be applicable to all ICOs without exception, therefore the need for compliance with regulatory requirements is assessed in each case individually.

FINMA also provided the now-classic division of tokens into 3 types:

1) Payment tokens are synonyms for cryptocurrency. They do not have any additional functions and can only be accepted as a means of payment;

2) Utility tokens are tokens that are designed to provide digital access to an application or service;

3) Asset tokens implies the possibility of participating in the company, receiving profits, or the right to receive dividends or interest. As for their economic function, tokens of this type are similar to shares, bonds or derivatives.

Payment tokens require compliance with AML legislation, but do not fall under the definition of securities. Utility tokens are not regulated, but under certain conditions, they can be recognized as securities, and Asset tokens are always securities, which entails corresponding obligations, for example, compliance with the requirements for prospectuses issue.

ICO can also combine several of the above categories. For example, AML regulation will apply to Utility tokens, which, in addition to technical functions, can be used as a means of payment.

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