Earlier this week the Swiss Financial Market Supervisory Authority (FINMA) announced that they have created a new “FinTech” license that allows blockchain or crypto companies to accept deposits of public money in the amount of $100 million Swiss Francs (CHF).
The new FinTech license will be available starting in 2019, and has to be applied for. FINMA notes that this move has, “relaxed requirements,” for fintech firms, though some barriers still separate fintech firms from normal banks.
Unlike a bank, the new FinTech license from FINMA prohibits fintech firms from investing the public money they receive or paying interest on it. Most banks or corporations wouldn’t have these kinds of restrictions placed on them. Regardless, this new set of regulations shows that some countries are working toward creating a crypto friendly banking environment.
FinTech is Changing Regulations Everywhere
The new FinTech license from FINMA is probably a direct result of fintech innovation from places outside of the banking sector. While still distinct from a regular bank, the new code that governs how the FinTech licensees will be granted references the Swiss Banking Act.
FinTech companies that want to accept public funds will have to provide the Swiss regulators with information about their business, and how they plan to store any assets that they are entrusted with.
Risk management, KYC and Anti-Money Laundering statutes will all apply to any company that receives a FinTech license in Switzerland, despite the fact they aren’t being given the same abilities that a bank would have.
Switzerland has taken on moderate ground in the global crypto regulation arena. This most recent regulatory upgrade joins a few others from Swiss regulators, all of which seem to favour the cautious adoption of a liberal stance towards blockchain and digital assets.
Many other influential nations haven’t been as quick to act on crypto regulations, except in the cases when they have been prohibited. China is perhaps the most notable example of a country that was fast to act to ban cryptos, once they became popular internationally.
The USA may be Opening up to Cryptos
Cryptos have fallen into a strange legal area in the USA. They are currently being treated as a commodity for tax purposes, which has left some crypto traders in a lurch. Now it looks like there is a member of the US House of Representative that is trying to lock-down firmer regulations for an important global industry.
Representative Warren Davidson (R) publicly revealed a bill that would create solid regulations for cryptocurrencies and ICOs earlier this week. According to Cleveland.com, Rep. Davidson announced that he will work to introduce his bill to the US House, at the Blockchain Solutions conference.
The new bill would create an, “asset class,” for cryptos, and, “would prevent them from being classified as securities, but would also allow the federal government to regulate initial coin offerings more effectively.”
As it stands today, the legislation for cryptos varies from state-to-state, and even within federal US Government regulatory bodies. The Securities and Exchange Commission (SEC) classifies cryptos as securities, even though the Commodities and Futures Trade Commission (CFTC) classifies them as commodities.
Clearly, new legislation is needed in the world’s largest capital market. As cryptos grow more popular globally, nations that don’t give new businesses a sense of legal stability aren’t going to be as attractive for new investments.
ICOs are a Tricky Subject
Rep. Davidson told media that ICO regulation would require, “light touch,” regulation. This may prove a hard sell in the USA, where numerous ICOs turned out to be total frauds.
The ICO feeding frenzy that emerged as crypto prices exploded last year has left many people wondering about the ethics of the entire crypto community, and given regulators all the evidence they need to come down hard on one of the most innovative ways to raise capital in human history.
Ultimately, countries will have to face strong competition in the international arena when it comes to crypto regulations, and nations that choose to overlook an emerging industry may face severe consequences down the road.
A lack of access to what could be the next global capital market could be catastrophic for countries that resist crypto-based development, no matter how powerful governments and central banks may seem at the moment.