Switzerland to Boost Crypto, Blockchain Business with FinTech License
Virtual coin and DLT projects will be able to take $100 million from outside funds under more relaxed requirements compared to the banking sector.
The Swiss Financial Market Supervisory Authority (FINMA) has published a guideline for the upcoming FinTech license, which should be introduced on January 1, 2019. The permit aims to promote innovations, including cryptocurrency and distributed ledger technology (DLT), by easing some of the existing rules.
The new regime will allow FinTech projects to raise outside capital of up to 100 million Swiss francs ($100 million) with lighter regulatory requirements compared to the banking industry. However, the companies must use the money only for the development of their ideas, FINMA explained in its Monday statement.
The license targets only FinTech initiatives falling within the scope of Article 1b of Switzerland’s Federal Banking Act, which lists “asset managers, notaries and business agents who simply manage their customers’ funds and who do not engage in regular banking business.” Crypto exchanges comply with the definition since they provide deposit services to their clients and do not lend them money.
“The FinTech licence allows institutions to accept public deposits of up to CHF 100 million, provided that these are not invested and no interest is paid on them. A further requirement is that an institution with a FinTech licence must have its registered office and conduct its business activities in Switzerland,” the regulator explained.
The FINMA guidelines provide detailed information about the application requirements. The projects must disclose their shareholder structure, including all investors with more than 5% of direct or indirect interest. The requirements also apply to the so-called beneficial owners. Projects must provide information about their executive boards and governing bodies, including debt enforcement register extracts, declarations for pending and concluded legal proceedings, and Swiss criminal record extracts or the same documents from the last country of residence in the case of foreign citizens. The FinTech companies are also obliged to file a three-year business plan with a balance sheet and an income statement, as well as optimistic, realistic, and pessimistic scenarios.
Aside from granting or denying the new license, FINMA will also supervise the projects and can impose sanctions in case of regulatory breaches.