On July 26, the Swiss Financial Market Supervisory Authority (FINMA) published its guidance on risks and challenges for issuers of stablecoins and banks providing guarantees. Specifically, the guidance provides information on financial market law related to issuance of stablecoins as well as their effects on the supervised institutions.
FINMA noted that the Anti-Money Laundering Act is almost always applicable to stablecoins as they are usually intended to serve as a means of payment. Since stablecoin issuers are considered financial intermediaries for the purposes of anti-money laundering law, the verification of the identity of the stablecoin holder as the customer and establishment of the identity of the beneficial owner is required.
Due to increased risks of money laundering, terrorist financing and the circumvention of sanctions, there is a need for adequate verification of the identity of everyone holding the stablecoins by the issuing institution or supervised financial intermediaries.
“FINMA notes that various stablecoin issuers in Switzerland use default guarantees from banks, which means that they do not require a licence from FINMA under banking law… but instead only need to be affiliated to a self-regulatory organisation as a financial intermediary” reads the guidance.
The regulator includes protection for depositors, such that customers must make their own claims against the Swiss bank issuing the default guarantee if a stablecoin issuer becomes bankrupt. “The default guarantee must cover at least the total of all public deposits including any interest earned by customers,” reads the guidance.
