Mark Branson, CEO of the Swiss Financial Market Supervisory Authority FINMA, provided a regulator’s perspective in his keynote speech: the objective of FINMA is to lower market entry barriers for Fintech companies. Mark Branson also emphasized that FINMA is as passionately anti-crime as it is pro-innovation. FINMA, in publishing its guidelines on how it intends to apply financial market legislation to Initial Coin Offerings (ICOs), has played a pioneering role. As no international classification of so-called tokens exists as yet, FINMA proposes a classification according to the famous duck test: if it looks like a duck, swims like a duck and quacks like a duck, then it probably is a duck. According to what a token’s economic function most closely corresponds to, it will thus be qualified either as payment token (‘cryptocurrency’), asset token (analogous to equities, bonds, or derivatives) or utility token (offering digital access to an application or service).
The high-level panel comprised Peter Stephens (UBS Crypto 2.0), Niklas Nikolajsen (Co-Founder Bitcoin Suisse), Mona El Isa (Co-Founder Melonport) and Simon Taylor (Co-Founder 11:FS), with Sam Chadwick (Director of Innovation, Thomson Reuters) acting as moderator. The discussion focused on three main issues: cryptocurrencies, ICOs and regulatory opportunities and risks in the future.
Major challenges faced by cryptocurrencies are faced in equal measure by fiat currencies: while the panel acknowledged that cryptocurrencies could be abused for illegal activity, views were expressed that this risk was not graver than with fiat currencies. Cryptocurrencies with their ownership trail may even facilitate the source of funds checks by banks and others. The fight against money laundering and the financing of terrorism were held to be regulatory challenges for both fiat and digital currencies. It is crucial that firms providing services around cryptocurrencies are subjected to the same anti-money laundering rules as ‘traditional’ financial services providers performing comparable transactions (which is the case in Switzerland).
On ICOs, the FINMA guidelines were praised as the best regulatory framework available at the moment, which underlined the pre-eminence of Switzerland as a pro-business environment, conducive to innovation in the Fintech sphere.
As important as such local steps towards regulation are, the panel was clear: for the future, a global Code of Conduct for ICOs is needed at international level.
It was also acknowledged that the blockchain technology may have even greater potential in certain areas outside of finance, such as the Internet of Things (IoT) or the energy sector.