It was initially reported that Gibraltar could be the first ever country to introduce specific rules for initial coin offerings (ICOs); however, in one swift move, it very recently got surpassed by Switzerland.
Unlike Gibraltar, Switzerland did not just announce its plans but went ahead to roll out its actual guidelines on ICOs.
In an announcement made through its site, the Swiss Financial Market Supervisory Authority (FINMA) published guidelines which pertained to the fundraising mechanism that became one of the most famous phenomena of 2017.
The guidelines, which work in addition to FINMA’s Guidance 04/2017, provide details to ICO executors on how an ICO should be initiated, managed and concluded in order to ensure complete transparency and effective handling of funds, as well as the deliverance of products and services promised to stakeholders.
The guidelines are detailed and helpful
Some key points from the guidelines allude towards the thoroughness with which FINMA has studied the functions of ICOs.
For instance, FINMA explains that not all ICOs can be judged under the same perspective, as the tokens that are distributed through the ICOs are not the same. It elaborates by mentioning how “payment tokens” are cryptocurrencies but “utility tokens” provide access to the ICO’s intended platform, while “asset tokens” signify the representation of real-world physical assets or revenue streams.
Building upon this classification of tokens, FINMA elaborates that ICOs could be identified under these labels as well, such as “payment ICOs,” “utility ICOS,” and “asset ICOs.”
It then describes that due to these different types of tokens and ICOs, each ICO needs to be treated with an approach that is designed for it, but the overall guidelines provide enough information for any executor to ensure that they are meeting some of the most important requirements.
However, it does not turn a blind eye to the fact that there would be ICOs which have tokens performing more than one function. For instance, a “payment token” could also serve as an “asset token.”
In those instances, FINMA assures the executors that if they have any questions for these “hybrid” ICOs, then FINMA personnel can look into their case and elaborate the guidelines on a case to case basis.
The guidelines take a comprehensive approach towards anti-money laundering and securities regulations, highlighting their importance towards ICOs and how several ICOs could very well fall under different acts about these requirements, for which they will need to be studied effectively.
FINMA also mentioned that the guidelines are put in place for the protection of investors, and are very important to follow because, under the country’s current civil law, it is uncertain whether a blockchain contract or agreement – which ICOs go by – is legally binding.
However, that did not stop FINMA from commending the effectiveness of blockchain technology, with its CEO, Mark Branson mentioning that it has “innovative potential within and far beyond the financial markets.”
This will go a long way in helping other regulatory authorities
Since this is the first of its kind move by a major financial regulatory authority, it will help authorities from other jurisdictions in developing their own guidelines of this sort especially because these guidelines address specific issues identified in ICOs, and with the regulator, FINMA, offering its help to explain them further to those who are in need of it.
If this approach gets to be successful in Switzerland, then this most certainly can influence other countries’ methodologies towards ICOs as well.