The subsequent opinion section is an initial evaluation of the legal features of the newly announced ICO guidelines.
The FINMA guidelines
1. First and foremost, there is no requirement for new guidelines. Existing guidelines are adequate to control even recent formations such as tokens/coins or cryptocurrencies. A fundamental standard shared by all civil law authorities – whereby the understanding of prevailing laws can be long-drawn-out to new cases if they are similar. Consequently, FINMA properly categorizes tokens/coins and cryptocurrencies in very real-world terms based on their use and the privileges attached to them. Then they choose if and when prevailing Securities´ Laws and AML (Anti Money Laundering) Guidelines will apply.
2. Grounded on current skill, essentially 4 types of tokens/coins have been organized: payment tokens (i.e. cryptocurrencies), utility tokens, asset tokens and hybrid tokens.
- Payment tokens are not securities – hence all the onerous compliance with securities laws is disqualified – but because they are a method of reimbursement, then AML (Anti Money Laundering) guidelines apply;
- Utility tokens are to be examined more sensibly. Mostly, they are not to be deliberated as securities if they allow the right to a digital use or to a digital service. Furthermore, the investor must be able to use the token at the time of the ICO.
- Asset tokens are constantly considered securities and will fall in the burdensome function of Swiss Securities´ Laws (i.e. a prospectus is necessary, etc). Nevertheless, because they are not considered a means of reimbursement, AML does not apply.
- Hybrid tokens will have to be assessed on a case to case footing.
3. All the above operates only to tokens which now exist at the time of the ICO. Whichever token will be delivered post-ICO is to be considered a security
4. FINMA also offers a well-detailed Questionnaire which is to be fulfilled by the ICO issuer to appeal FINMA´s opinion on the potential ICO.
5. Conclusively, AML compliance can be easily achieved by hiring the services of a Swiss financial go-between which will certify compliance with AML laws on behalf of the ICO issuer.
Obviously, with the growing flow of ICO´s, FINMA will offer vital explanations and understanding to the instructions and an attention-grabbing framework of realistic ICO cases will soon grow, which will be a very valuable precedent for practitioners and regulators worldwide.
All things considered, a progressive and stable approach which no doubt will bring very good commerce in Switzerland. Well done the Swiss.