Finma: Crypto Startups Can Handle up to $100M of Deposits in Switzerland
Crypto-asset companies can now apply for licenses to handle as much as 100 million Swiss francs ($100 million) in public deposits under new regulations published on Dec. 3 by Switzerlands Financial Market Supervisory Authority (Finma). The development underscores the European countrys efforts to promote technological innovation, as in the past only commercial banks were allowed to receive such large deposits.
Companies Cannot Reinvest or Pay Interest on Deposits
There is a catch, however. Blockchain and cryptocurrency-related businesses that are granted the fintech licenses to manage large amounts of investor funds may not invest or pay interest on the deposits, according to the new guidelines, which go into effect on Jan. 1, 2019.
Finma has also set out stringent fiduciary and operational requirements for applicants. For example, cryptocurrency startups must submit clear documentation describing their business, target market and location. The regulator also requires full disclosure about board members, including their home addresses and any record of past criminal activity.
In addition, shareholders that directly or indirectly own 5 percent or more of the issued capital of a company must be disclosed to Finma. The same applies to foreign shareholders that hold equivalent equity stakes. Finma said that companies must submit any information on agreements, such as shareholder deals, and any other ways in which the applicant may be controlled or materially influenced.
The license application must contain a detailed justification, it added. All relevant information must be documented, and changed documents must also be submitted with changes tracked.
Boosting Innovation, Stemming the Flow
The fintech license was created after the Swiss parliament amended the Banking Act earlier this year, in a move aimed at boosting innovation within the cryptocurrency industry. In February 2017, Switzerlands Federal Council released three measures for consultation to promote innovation in the financial sector and remove barriers to market entry for financial technology companies.
Two of those measures — the extension of the holding period for settlement accounts and an authorization-exempt innovation area, or sandbox — went into force on Aug. 1, 2017. And with the announcement of the new legal amendments, it is now possible for the third measure — a new authorization category with simplified requirements in the Banking Act — to take effect on New Years Day. In addition, the sandbox will be extended to include crowdlending business models, under whic ...