3 Key Takeaways From Switzerland's New Stablecoin Guidelines

Published on by Cointele | Published on

In a news release published on Sept. 11, FINMA takes note of the steadily proliferating issuance of stablecoins since mid-2018, as well as confirming that the Geneva-based Libra Association had sought an assessment by FINMA for its Facebook's stablecoin project under Swiss law.

FINMA's introductory remarks outline that the watchdog treats stablecoins as it does other blockchain-based tokens, with a focus "On the economic function and the purpose of a token" and with a "Same risks, same rules" approach that aims to be technology-neutral and principle-based.

FINMA confirms the Libra Association has sought an assessmentFacebook's proposed Libra project in its current form, FINMA notes, would require a payment system license on the basis of Switzerland's Financial Market Infrastructure Act.

The regulator notes that any additional services that may increase the risks of a given payment system - such as bank-like risks - would be addressed by the imposition of additional regulatory requirements in line with FINMA's "'same risks, same rules" maxim.

Three key takeaways from FINMA's approach to Libra.

"Due to the issuance of Libra payment tokens, the services planned by the Libra project would clearly go beyond those of a pure payment system and therefore be subject to such additional requirements."

Such additional requirements would apply to the Libra Association's proposed capital allocation for credit, market and operational risks, its risk concentration, liquidity and management of the Libra Reserve.

"The returns and risks associated with the management of the reserve were borne entirely by the Libra Association and not - as in the case of a fund provider - by the 'stable coin' holders."

A last important point from FINMA is that the international scope of Libra requires an internationally coordinated approach in order to establish the requirements for its reserve management, governance and AML system.

Cointelegraph reported earlier today on the context of the LIbra Association's appeal to FINMA for an assessment of the proposed stablecoin network.