Canada    FinTech Guide    Chapter 15    Switzerland

15. Initial Coin Offerings (ICOs)
Switzerland  Switzerland

The social and political climate towards ICOs is positive. However, if abusive practices develop they will be stopped by the Swiss Financial Market Supervisory Authority (FINMA).

Legal Affairs

There is no explicit regulation on ICOs and the issuance of tokens/coins in Switzerland. FINMA published (new and amended) Guidelines for enquiries regarding the regulatory framework for initial coin offerings (ICOs) in February 2018 (FINMA-ICO-Guidelines). The FINMA-ICO-Guidelines set out how FINMA intends to apply Swiss financial market legislation in handling enquiries from ICO organizers.

Restrictions: Taking into account the positive environment in Switzerland, there are no explicit restrictions on ICOs or the issuance, distribution and/or transfer of tokens/coins. However, such activities have to comply with the general rules as set by the Swiss financial market legislation. In the context of the release of the FINMA-ICO-Guidelines in February 2018 the FINMA CEO, Mark Branson, said: “Our balanced approach to handling ICO projects and enquiries allows legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.”

Licence and costs: For the issuance of payment tokens/coins (synonymous with cryptocurrencies) FINMA will treat such tokens/coins not as securities but will require compliance with anti-money laundering regulations. For the issuance of utility tokens/coins (intended to provide digital access to an application service) FINMA will not as a general rule treat such tokens/coins as securities. For the issuance of asset tokens/coins (representing assets or participations in assets) FINMA will treat such tokens/coins as securities and securities law requirements apply for trading etc. and civil law requirements under the Swiss Code of Obligations apply (e.g. prospectus requirements). The processing of FINMA enquiries and clearances is subject to a fee based on the time required and the applicable hourly FINMA rate. Fees can be reduced by good requests containing the minimum information requirements for ICO enquiries.

Token classification: The FINMA-ICO-Guidelines classify the tokens/coins as follows (notwithstanding that there is no generally recognized classification of ICOs and the tokens/coins that result from them): Payment tokens/coins (synonymous with cryptocurrencies) are intended to be used, now or in the future, as a means of payment for acquiring goods or services or as a means of money or value transfer. Cryptocurrencies give rise to no claims on their issuer. Utility token/coins are tokens/coins which are intended to provide access digitally to an application or service by means of a blockchain-based infrastructure. Asset tokens/coins represent assets such as a debt or equity claims on the issuer. Depending on the circumstances and facts also hybrid tokens/coins can be created.

Prospectus: There is a duty to publish a prospectus, if the tokens/coins qualify as securities – in the case of asset tokens/coins or, as the case may be, utility tokens/coins.

AML/KYC: Anyone who provides payment services or who issues or manages a means of payment is as a financial intermediary subject to the Swiss Money Laundering Act (AMLA). Therefore, the issuance of payment tokens/coins constitutes the issuance of a means of payment subject the AMLA as long as the tokens/coins can be transferred technically on a blockchain infrastructure. This may be the case at the time of the ICO or only at a later date. In the case of utility tokens/coins the AMLA is applicable, provided the main reason for issuing the tokens/coins is to provide access rights to a non-financial application of blockchain technology. Under the current FINMA practice, the exchange of a cryptocurrency for fiat money or a different cryptocurrency is subject to AMLA.

Contributing Authors

Hartmann Müller Partners

Jürg E. Hartmann
Zurich, Switzerland

Markus Aeschbacher
Zurich, Switzerland

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Chapter Index:

1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018