Swiss Regulator Blacklists ‘Islamic’ Cryptocurrency Broker

FINMA, the Swiss Financial Market Supervisory Authority, has updated its blacklist of companies that are suspected of conducting unauthorized activities in the financial markets.

The latest update to the FINMA’s warning list is a cryptocurrency broker called Crypto Islamic Bank. The Swiss authority said the newly-listed company offers clients a range of crypto services including mining operations, wallet, Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term, trading, and asset management solutions. A glance at the website in question also reveals that the brokerage provides no confirmation regarding licenses held in any jurisdictions either, which raises a red flag as far as investors are concerned.

Halal or Haram

Crypto Islamic Bank wants to promote its unregulated service by claiming a Shariah-compliant cryptocurrency product. Shariah, or Islamic law, is derived from the religious teachings of the Quran, which is the central religious text followed by over 1.8 billion Muslims worldwide.

There has been a lot of debate on the use of virtual coins as a legitimate form of currency and investment as Islamic law emphasizes real economic activity based on physical assets and without pure monetary speculation.

All economic activity in Islamic finance must be compliant with Sharia law, ‎which has stringent rules to ensure certainty and immediacy of transactions. Islamic ‎law also prohibits the acceptance of interest or fees for loans of money.‎

Back to the warning…

Although the financial watchdog didn’t provide specific details, the inclusion of Crypto Islamic Bank means it is not officially registered in Switzerland and was thus not authorized to offer its trading services to Swiss traders.

In the ‘About Us’ section, the company refers to global offices. ‎However, it didn’t claim any specific regulatory status in these jurisdictions.

Last year, Finance Magnates reported that FINMA shut down a cryptocurrency racket as part of its latest efforts to tackle digital currency fraud. Per its latest edict, FINMA’s target was a fake cryptocurrency provider. The Swiss Financial Market Supervisory Authority is currently pursuing as many as twelve other cases amidst an uptick of fraud in the country.

According to a FINMA statement regarding the action, this activity is similar to the deposit-taking business of a bank and is illegal unless the company in question holds the relevant financial market license.

Meanwhile, mainstream Swiss banks have largely distanced themselves from engaging with cryptocurrency companies, which have come under increasing scrutiny from regulators. While the digital asset has been widely accepted in Switzerland, traditional lenders have been reluctant to do business with crypto-linked services providers because of Money Laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term concerns and prospects of a regulatory crackdown.