During its meeting held on 15 January 2020, the Swiss Federal Council took note of the most recent developments regarding so-called stable coins and it discussed the work of international standard-setting bodies, such as the Financial Stability Board, in view of new regulations of such stable coin projects. The Swiss Federal Council confirmed again that Switzerland is generally open to projects that intend to reduce the costs of cross-border payment transactions and that seek to promote financial inclusion. However, the Swiss Federal Council also highlighted the regulatory challenges of stable coin projects with regard to financial stability or combating money laundering and it confirmed again that the Swiss Federal Council is committed to international cooperation between governments, central banks and supervisory authorities in order to overcome such challenges.
Stable Coins are blockchain-based tokens that are backed with assets in order to minimize fluctuations in value. The underlying assets can be fiat currencies (CHF, Dollar, Euro), precious metals, commodities, or securities. In view of the increasing number of such projects, FINMA has also expressed its views on this subject and published a guidance on 11 September 2019 regarding the regulatory classification and the corresponding requirements of stable coin projects. FINMA defined the following key questions for the regulatory assessment of stable coin projects: The legal basis of the claims of the stable coin holders (e.g., contract or property law), the allocation of the legal and economic risks between the Stable Coin holders and the issuer and the type of the underlying assets (currencies, commodities, real estate or securities). However, in practice, such projects are almost always subject to the Swiss anti-money laundering regulations due to the payment purpose of the stable coins. Depending on specific structuring and design of the respective projects, authorization requirements under the Banking Act, the Collective Investment Schemes Act and the Financial Market Infrastructure Act may also have to be considered.
In June 2019, Facebook announced to create a new cryptocurrency called Libra that should be backed by a basket of currencies. This new cryptocurrency should be issued by an association based in Geneva. In an indicative regulatory assessment, FINMA concluded that the Libra project should be qualified as a payment system that would require a respective license according to the Swiss Financial Market Infrastructure Act. As a payment system, the Libra project would automatically also be required to adhere to the Swiss anti-money laundering regulations. Besides, additional requirements may have to be fulfilled depending on the specific design and / or services offered by the Libra project.
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