The Swiss Bankers Association (SBA) has published guidelines for opening corporate accounts for blockchain based firms. The SBA action was taken with the support of the Crypto Valley Association (CVA) in an interesting alliance of new finance and old. Switzerland has gained a global reputation as a prominent destination for crypto and blockchain companies. In 2017 (the same year the CVA was founded), four of the ten largest initial coin offerings (ICOs) were conducted in Switzerland. Banks in Switzerland have been formally represented by the SBA for about 100 years.
The SBA issued the following statement:
“The number of blockchain companies in Switzerland has risen sharply. The SBA welcomes this trend and takes a positive view of the high market momentum, as it boosts Switzerland’s attractiveness as a financial centre. Banks see blockchain technology as an opportunity opening up an array of possibilities for the country as a financial and technology location. Within the context of its priorities, the SBA promotes and supports an innovation-friendly environment in the digitalisation arena. This also includes promoting conditions that support the sustainable growth of companies involved in blockchain technology.”
The SBA recognized the ongoing hurdles for blockchain companies or ICOs in opening bank accounts as they may pose an element of risk for banks – especially in regards to money laundering. As part of the initiative, the SBA has created an internal working group that involved the CVA leadership.
The Guide is described as making key distinctions between blockchain-focused companies seeking to raise capital through an ICOs and those who do not.
According to the outline, companies which do not raise capital with an ICO should be treated no differently than regular Small Medium Enterprises (SMEs). A further distinction is being made between ICOs carried out with fiat currencies and those using cryptocurrencies.The most comprehensive requirements apply to the documentation for companies that finance an ICO via cryptocurrencies. According to the two groups, the guide has been welcomed by FDF, the Federal Department of Finance, and FINMA, the Swiss Financial Market Supervisory Authority.
“We have seen a lot of positive growth in the ecosystem over the past 18 months and now it was very important that the SBA and CVA could come together and work on a solution that can ease some of the restrictions that could hamper the continuation of that growth.”
Dr Mattia Rattaggi, who chairs the CVA Regulatory Working Group that led the initiative from the CVA side, said the guide is an important and timely contribution.
“As a multi-stakeholder organization it was important for us at the CVA to bring a diverse range of perspectives and expertise to the table for the development of these guidelines and we hope that it will benefit the healthy advancement of the crypto and blockchain industry in Switzerland.”
In brief, the Guide may be summarized as follows:
- Blockchain companies without an ICO: Companies whose business model has links to blockchain technology but that do not use this for corporate financing should not be treated any differently to other SME customers wanting to open an account. The usual, strict legal regulations that govern account opening apply. Companies have a duty to cooperate in the opening of banking relationships. They need to be able to demonstrate that they are aware of and adhere to all regulations applicable to their business models. This includes being able to show a meaningful business plan and adequate processes and resources.
- Blockchain companies with ICOs: Companies that raise capital for corporate purposes by issuing tokens using blockchain technology can do so in the form of fiat or cryptocurrencies. For companies whose ICOs are funded by cryptocurrencies, higher and additional requirements should be imposed, whether or not they are subject to the Anti-Money Laundering Act. The guidelines recommend that the ICO organiser should apply the relevant Swiss standards on the origin of funds (KYC) and money laundering (AML) when accepting cryptocurrencies under an ICO. It is also proposed that the acceptance of cryptocurrencies under ICOs should be treated as a minimum in the same way as a cash transaction.