FINMA publishes guidance on stablecoins

The Swiss Financial Market Supervisory Authority (FINMA) has issued guidance on stablecoins, highlighting regulatory practices, associated risks, and increased concerns regarding money laundering and financial crime. Key takeaways include:

• Regulatory Framework:
  FINMA outlines financial market law considerations for stablecoin projects, building on its 2019 ICO guidelines.
• Risk Awareness:
  Stablecoin projects pose elevated risks of money laundering, terrorist financing, and sanction circumvention, which could harm Switzerland’s financial reputation.
• Default Guarantees:
  Many Swiss stablecoin issuers rely on bank guarantees, often bypassing the need for a banking licence. However, these arrangements entail risks for stablecoin holders and guarantor banks.
• Minimum Standards:
  FINMA specifies its minimum requirements for default guarantees to protect depositors, applicable to stablecoin-related activities.

This guidance underscores FINMA’s focus on balancing innovation with robust risk management in Switzerland’s evolving financial landscape.