FINMA Grants License to 2 New Crypto Banks, Brings Strict AML Laws

The Swiss financial regulator on Monday announced the issuance of banking and securities dealers’ licenses to two “pure-play Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term service providers” - SEBA Crypto AG and Sygnum AG. Both of these companies will offer services only to institutional customers.

Unfavorable regulations on crypto firms

Beside granting new licenses, the Financial Market Supervisory Authority (FINMA) published guidelines for the application of regulatory frameworks on Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term on the blockchain, which can be considered as too strict. The watchdog agency clarified that the existing rules to check money laundering would apply to virtual asset service providers (VASPs) including exchanges, wallet providers, and trading platforms. “Blockchain-based business models cannot be allowed to circumvent the existing regulatory framework,” the watchdog agency stated. “This applies particularly to the rules for combating money laundering and terrorist financing, where the inherent anonymity of the blockchain presents increased risks. For this reason, Switzerland has always applied the Anti-Money Laundering Act to blockchain service providers.”

Mandatory customer verification

According to the guidelines, blockchain-based service providers are obligated to verify the identity of their customers, to establish the identity of the beneficial owner, and to take a risk-based approach to monitor business relationships. In addition, in case of suspected money laundering activity, these businesses need to file a report with the Money Laundering Reporting Office Switzerland (MROS). Moreover, the guidelines also restrict digital asset transfers to or from wallet platforms only by FINMA-supervised institutions. “Institutions supervised by FINMA are only permitted to send cryptocurrencies or other tokens to external wallets belonging to their own customers whose identity has already been verified and are only allowed to receive cryptocurrencies or tokens from such customers,” the agency stated. “Unlike the FATF standard, this established practice applies in Switzerland without the exception for unregulated wallets and is, therefore, one of the most stringent in the world.” Although Switzerland is known to be one of the friendliest regions to blockchain companies, the Swiss regulator is constantly battling with shady crypto projects. Earlier this year, it banned the $90 million initial coin offering (ICO) of crypto mining firm Envion AG for violating supervisory laws.