Against the backdrop of the growing number of projects for so-called "stable coins" since mid-2018, the Swiss Financial Market Supervisory Authority ("FINMA") published new guidelines on 11 September 2019 explaining the regulatory qualification of tokens that are linked to underlying assets such as fiat currency, commodities or securities with the goal to minimise fluctuations in their market value. The new guidelines supplement FINMA's ICO guidelines of 16 February 2018, which continue to apply. While the stable coin guidelines are general in nature, their publication coincides with the recent announcement by the Swiss based Libra Association to launch a payment token that is backed by a basket of fiat currencies, a project that has attracted worldwide attention by governments and regulators.
On 11 September 2019, FINMA published guidelines with a focus on "stable coins" (the "Stable Coin Guidelines" ) as a supplement to its February 2018 guidelines for enquiries regarding the regulatory framework for initial coin offerings (the "ICO Guidelines"). The Stable Coin Guidelines confirm FINMA's principle-based and technology-neutral approach to financial market regulation and provide a high-level overview of the regulatory qualification of stable coins under Swiss financial market laws, in particular with respect to the Swiss Banking Act, Collective Investment Schemes Act, Anti-Money Laundering Act and Financial Market Infrastructure Act. FINMA distinguishes between four categories of stable coins by reference to the underlying assets (see further below).
Supplemental Rules for Stable Coins
Since the release of FINMA's ICO Guidelines in February 2018, FINMA has observed an increasing number of projects for tokens that are linked to underlying assets such as a basket of currencies or commodities. For the purposes of the Stable Coin Guidelines, FINMA refers to such tokens as "stable coins", although it considers that this is primarily a marketing term. The aim of linking tokens to underlying assets is to prevent speculative swings which are typical for "traditional" payment tokens such as Bitcoin or Ether and, ultimately, to help establish cryptocurrencies as a stable, low-volatility means of payment. Against this background and given that there are no specific rules for stable coins under Swiss law, the Stable Coin Guidelines outline FINMA's approach for the application of the legal and regulatory framework to such coins.