FINMA thinks stablecoin issuers are a threat to Swiss banks
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The Swiss Financial Market Supervisory Authority (FINMA) sees stablecoin issuers as a problem for the country’s banks. Its 2019 guidelines already highlighted concerns about the legal and regulatory aspects of stablecoins. Since then, several projects have launched in Switzerland, making this issue even more pressing. Stablecoins holders typically have a payment claim against the issuer, which categorizes these claims as either banking deposits or collective investment schemes. The classification depends on whether the underlying assets are managed for the account and risk of the stablecoin holder or the issuer. The Anti-Money Laundering Act (AMLA) applies almost always due to stablecoins’ intended purpose as a payment method. The legal concerns In 2020, the Financial Action Task Force (FATF) identified that stablecoins share many money laundering and terrorist financing risks with cryptocurrencies. These risks include anonymous transfers via self-managed wallets, global reach, and suitability for layering in money laundering. The price stability and value storage functions of stablecoins make them attractive to criminals. Ongoing global conflicts have shown stablecoins’ potential for sanction circumvention and terrorism financing. On July 9th, FATF published an update on the implementation of standards for virtual assets and service providers. FINMA states that stablecoin issuers are financial intermediaries under anti-money laundering laws. They must verify the identity of stablecoin holders and establish the beneficial owner’s identity. If doubts arise during the business relationship, verification must be repeated. Earlier this year, the interdepartmental coordinating group on combating money laundering and the financing of terrorism (CGMF) also reported increased money laundering and terrorist financing risks through crypto assets. The CGMF’s report assumes that the prohibition of bearer savings books applies to stablecoin transactions in a technology-neutral way. This enforces financial intermediaries’ obligations to verify client identities, applying to all under AMLA. Banking law implications Internationally, stablecoin issuers are expected to…
Filed under: News - @ July 26, 2024 10:24 pm