FINMA Proposes Stricter AML Guidelines for Stablecoin Issuers in Switzerland

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The Swiss Financial Market Supervisory Authority (FINMA) has introduced new regulatory guidelines targeting stablecoin projects to ensure financial stability and compliance.
This move addresses the growing concerns over the regulatory challenges and financial risks posed by stablecoins.
FINMA’s new rules aim to classify stablecoin issuers as financial intermediaries, emphasizing the need for adherence to stringent Anti-Money Laundering (AML) standards.

Swiss FINMA’s latest stablecoin guidelines aim to enhance regulatory scrutiny and mitigate financial risks, pushing for industry-wide compliance and safety standards.

Why Are Stablecoins Under Scrutiny?

Stablecoins, which are designed to maintain a stable value by being pegged to traditional currencies or assets, have seen significant global adoption. However, their rapid growth has sparked regulatory concerns regarding the potential for misuse in illegal activities such as money laundering and sanctions evasion. In response, FINMA’s latest guidance seeks to identify stablecoin issuers as financial intermediaries, bringing them under the same regulatory lens as traditional financial institutions.

What Are FINMA’s Compliance Requirements?

Issued on July 26, FINMA’s guidelines necessitate that stablecoin issuers comply with robust Anti-Money Laundering (AML) protocols. These include, but are not limited to, verifying the identities of stablecoin holders and recognizing beneficial owners as per Articles 3 and 4 of the Anti-Money Laundering Act (AMLA). This directive mandates that stablecoin issuers adhere to the same AML standards as traditional financial intermediaries to mitigate illicit activities effectively.

Key Takeaways for Stakeholders

Stablecoin issuers are now required to verify the identities of their holders and beneficial owners rigorously. Compliance with stringent AML standards is mandatory, akin to traditional financial entities. Interestingly, issuers can still operate without a banking license, provided they meet certain conditions to protect depositors. These conditions include securing collateral from a bank to cover potential defaults, thus offering immediate claims in bankruptcy situations. The evolving global regulatory frameworks, underscored by the PwC Global Crypto Regulation Report, reflect a growing focus on stablecoin oversight.

Conclusion

FINMA’s newly proposed guidelines are a significant step toward enhancing the regulatory framework for stablecoins, ensuring they meet high standards for AML and depositor protection. As the stablecoin market continues to flourish, regulators are keen on implementing measures that not only protect consumers but also safeguard the entire financial ecosystem. With these new guidelines, FINMA aims to strike a balance between innovation in the cryptocurrency space and the necessity for rigorous regulatory oversight.

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