The Swiss Financial Market Supervisory Authority (FINMA) has issued new guidance on the issuance of stablecoins, highlighting default guarantees, associated risks, and its current practices. It also emphasizes the heightened risks of money laundering in this area.
Stablecoin projects have gained prominence in Switzerland over recent years, aiming to provide low-volatility payment methods on blockchain. FINMA previously addressed this in its September 2019 supplement to the ICO guidelines, discussing the regulatory framework for initial coin offerings (ICOs).
The new guidance details aspects of financial market law relevant to stablecoin projects and their impact on supervised institutions. FINMA points out the increased risks related to money laundering, terrorist financing, and sanction circumvention associated with stablecoins, which pose reputational risks for the Swiss financial sector.
FINMA notes that many stablecoin issuers in Switzerland use default guarantees from banks, often bypassing the need for a FINMA banking licence. This situation introduces risks for both stablecoin holders and the banks providing guarantees. To protect depositors, FINMA outlines its minimum requirements for default guarantees, applicable to dealings with stablecoins.
By FCCT Editorial Team
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