Swiss make corrections to Regulatory choking with the banking system
To make up for lost ground to competitors with the ushering of new regulatory laws, the Swiss cryptocurrency stakeholders, including the government, are now forging new banking system rules to ease the opening of bank accounts for cryptocurrencies.
The new regulations have defined token in three new categories – Asset, Utility, and Payment and tightened rules against money laundering. Payment Tokens were expected to comply with the Anti-money laundering rules, which industry experts regarded to be ‘pretty reasonable.’ However, the entrenched players did not find much comfort in these and had resulted in many of them criticising the turn of events in Switzerland.
FIN ministry new rule changes
The finance ministry in the crypto valley has extended necessary legislative support for setting up of cryptocurrency framework, by revisiting its rules from time to time. In one of its recent such updates, in May, the guidelines for ICOs were reworked to ensure stringent implementation of rules. Unfortunately, the stricter rules led to many of the established players seeking overseas turfs to continue their business. Switzerland is already in heated competition with neighboring cantonments such as Liechtenstein and international marketplaces such as the British Virgin Islands as well as Gibraltar and Cayman Islands.
The revised ICO guidelines which were introduced in February, earlier this year resulted in the epicenter of cryptocurrencies in Switzerland, Zug losing out a major chunk of new investors. The authorities of this ‘crypto city’ contend that if the rules are not eased, that many more could leave for other markets. Finance Director of Zug, Heinz Taennler says, “All their banking relationships are going to Liechtenstein. These are hundreds of jobs that have been created, and every job is important.”
Under pressure from agencies, the government has now reached out the central bank – Swiss National Bank, to help the country and permit the introduction of new rules which will permit opening bank accounts by crypto users.
In the run-up to the February 2018 legislative changes, Zuercher Kantonalbank had terminated over 20 bank accounts which used decentralized currencies in 2017. Apart from this bank, only very banks are willing to accept cash deposits which are valued in cryptocurrencies raised for ICOs.
Banks such as Banca Zarattini use other rules to allow cryptocurrency-based deposits, like only those ICO companies which have KYC accounts or AML procedures, are allowed to bank with them. Moreover, Hypothekarbank Lenzburg is known to charge over 2,500 Swiss francs only for purposes of assessing the initial stages.
FINMA has to innovate
The challenge as of now for the Swiss regulators is to find a means to continue with rules which are necessary for protecting the fundamental rights of consumers. But at the same time, it will also have to find methods which will allow it to encourage the positive evolution of the cryptocurrency environment.
The result of the downside of events in Crypto Valley thus far has led to the Central bank and the Swiss Bankers Association in May reconsidering many of the new regulations. Their review has resulted in a new line-up of conditions and checks for banks to implement the processes of setting up ob bank accounts and cryptocurrency firms to continue issuing ICOs without fear of money laundering.