This article examines the Swiss Financial Market Supervisory Authority’s （FINMA） concerns about stablecoin issuers and their impact on Swiss banks, focusing on regulatory implications and financial stability.
Points
- FINMA’s concerns about stablecoin issuers and their impact on Swiss banks.
- Regulatory implications and legal concerns surrounding stablecoins.
- Potential risks and measures for ensuring financial stability.
- Broader implications for the global financial system.
FINMA’s Concerns About Stablecoin Issuers
Regulatory and Legal Concerns
The Swiss Financial Market Supervisory Authority （FINMA） has highlighted concerns regarding stablecoin issuers and their potential threat to Swiss banks. According to FINMA’s 2019 guidelines, legal and regulatory aspects of stablecoins pose significant challenges.
Stablecoin Classification
Stablecoins holders typically have a payment claim against the issuer, categorizing these claims as either banking deposits or collective investment schemes. The classification depends on whether the underlying assets are managed for the account and risk of the stablecoin holder or the issuer.
Anti-Money Laundering Act （AMLA） Compliance
Under the Anti-Money Laundering Act （AMLA）, stablecoin issuers are considered financial intermediaries and must comply with stringent verification requirements. These include verifying the identity of stablecoin holders and establishing the beneficial owner’s identity.
FATF Findings and Global Risks
In 2020, the Financial Action Task Force （FATF） identified that stablecoins share many money laundering and terrorist financing risks with cryptocurrencies. These risks include anonymous transfers via self-managed wallets, global reach, and suitability for layering in money laundering. Ongoing global conflicts have shown stablecoins’ potential for sanction circumvention and terrorism financing.
Banking Law Implications
Banking Deposits and Guarantees
Internationally, stablecoin issuers are expected to be under appropriate national supervision, following the Financial Stability Board’s （FSB） 2023 recommendations. In Switzerland, some stablecoin issuers use bank guarantees to bypass FINMA’s banking license requirements but still need affiliation with a self-regulatory organization as financial intermediaries.
Risks and Protections
Stablecoin issuers and banks providing guarantees face risks. To protect depositors, FINMA has set minimum requirements for these default guarantees, ensuring customer claims are covered and access to guarantees is straightforward. Multiple default guarantees can increase coordination needs and operational risks, potentially leading to unauthorized activity if not adequately managed.
Impact on Financial Stability
The legal and regulatory concerns raised by FINMA highlight the potential risks stablecoin issuers pose to financial stability. Ensuring compliance and implementing robust regulatory measures are crucial for mitigating these risks and safeguarding the financial system.
Broader Implications for the Global Financial System
Global Regulatory Measures
The concerns raised by FINMA reflect broader global regulatory challenges associated with stablecoins. Ensuring financial stability and preventing illicit activities require coordinated international regulatory efforts.
Future Outlook
As stablecoins continue to gain traction, regulatory bodies worldwide will need to enhance their oversight and implement stringent measures to ensure compliance and protect the financial system. The proactive approach taken by FINMA sets a precedent for other regulatory authorities to follow.