Crypto banks have been in the making for some time now, and it seems that the concept is finally taking off. Switzerland, the mountainous country in the middle of Europe has decided to give two entities the preliminary license needed to open a crypto bank in the country. This doesn’t mean that the country is going crypto anytime soon, the license stipulates many conditions to make sure that the new banks comply with existing regulations. With this Switzerland has become the first nation in the western world to do so. This is because the regulators in the country have a welcoming approach as long as crypto complies with regulations. One of these regulations prevent these companies from doing transactions with individuals not known to the crypto bank in question.
The Swiss Financial Market Supervisory Authority (FINMA) has published guidance on how it applies Swiss anti-money laundering rules to financial services providers supervised by FINMA in the area of blockchain technology. The regulator recognizes the innovative potential of new technologies for the financial industry. However, it wants to apply the relevant provisions of financial market law in a technology-neutral way. Blockchain-based business models cannot be allowed to circumvent the existing regulatory framework, and FINMA has made this clear. This applies particularly to the rules for combating money laundering and terrorist financing, where the inherent anonymity of blockchain technology presents increased risks.
Licenses finally issued
For the first time, FINMA has issued banking and securities dealers’ licenses to two pure-play blockchain service providers. The companies involved are SEBA Crypto AG registered in Zug and Sygnum AG registered in Zurich, which will offer services for institutional and professional customers. Many conditions are attached to the license issued to make sure that all regulations are followed. Sygnum has also been awarded its Swiss licenses on a conditional basis until it meets “secondary requirements” demanded by FINMA. It has also applied for a capital markets services license in Singapore.
Tax haven to be crypto haven?
These are not the first crypto-centric projects that have come up in Switzerland. The Swiss financial center has for the last couple of years been gearing up to provide a blockchain-based infrastructure to trade the new digital assets. The Swiss stock exchange operator SIX plans to launch a new platform next year while several start-ups have also sprung up in Switzerland. The country with its friendly regulations and a financial hub to the world has provided a perfect ground for companies involved in the Blockchain technology. This is especially important considering the fact that most jurisdictions are taking a tougher stance on it.
Switzerland has been at the forefront of the crypto revolution for some time. It has mainly been in the headlines after Libra choose to register in the country. This is a historic turning point as far as crypto is concerned. The young technology is finally getting integrated into formal banking. The outcome of this will surely affect the future and serve as a model for other countries. Switzerland has had a reputation for facilitating shady banking for decades, but when it comes to crypto the alpine country is going for a different direction of transparency.
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