Swiss financial watchdog FINMA rolls out guidance for stablecoin issuers

Swiss regulator FINMA has published guidance for stablecoin issuers, calling on all holders of digital tokens pegged to fiat currencies to verify their identity.

The Swiss Financial Market Supervisory Authority has published new guidance for issuers and banks providing guarantees addressing the risks and challenges associated with stablecoins. In the guidance dated July 26, the regulator underlined the need for stablecoin issuers to verify the identities of token holders and beneficial owners to mitigate these risks.

“[…] “The identities of all holders of stablecoins must be adequately verified by the issuing entity or appropriately supervised financial intermediaries.”

FINMA

Addressing the banking sector, FINMA noted that accepting public deposits in exchange for stablecoins generally requires a banking license. However, default guarantees provided by financial lenders may exempt issuers from this requirement under certain conditions. Therefore, in order to protect depositors, FINMA developed minimum requirements for the applicability of the exemption for default guarantees.

For example, in the event of the stablecoin issuer’s bankruptcy, “each customer must have its own claim against the Swiss bank that issued the default guarantee.” Additionally, the guideline states that the default guarantee “must cover at least the aggregate of all public deposits, including interest earned by customers.”

FINMA’s guidance also cited a Federal Council report addressing regulatory issues in the financial sector, stating that action should be taken to address regulatory gaps in the stablecoin sector, but did not provide specific details.

In Switzerland, stablecoins currently operate under the standard legal framework for financial services rather than having a specific regulatory framework. They are typically classified as deposits or collective investment schemes under banking law, depending on the management of the underlying assets.