Not to be outdone by Malta's announcements, the Swiss regulator (FINMA) has published its own ICO guidelines, which complement earlier Guidance. Unlike Malta, there is no specific regulation proposed at this stage. But FINMA has tried to clarify that, when assessing ICOs, it will focus on the economic function and purpose of the tokens issued by the organiser, and whether they are (or will be) tradeable or transferable. FINMA categorises tokens into three types, although admits hybrid forms are possible:
- Payment tokens are synonymous with cryptocurrencies and have no further functions or links to other development projects. Tokens may in some cases only develop the necessary functionality and become accepted as a means of payment over a period of time.
- Utility tokens are tokens which are intended to provide digital access to an application or service.
- Asset tokens represent assets such as participations in real physical underlyings, companies, or earnings streams, or an entitlement to dividends or interest payments. In terms of their economic function, the tokens are analogous to equities, bonds or derivatives.
Malta says that these are all forms of "virtual currency" (i.e. digital currencies that are not backed by government - as opposed to e-money, which is the digital version of a country's 'fiat' currency). The Maltese definition of a virtual currency may also be wider, as the Swiss guidelines are only aimed at crypto-currencies - those issued or implemented using cryptographic or "distributed ledger technology". The other differences seem to be in name only - the Maltese would refer to Swiss "payment tokens" as merely "coins" and prefer the name "securitised tokens" for the Swiss "asset tokens".
On the basis of the function and transferability of the relevant crypto-currency), FINMA will treat Swiss ICOs as follows (see diagram on page 8 of the Guidelines):
- Payment ICOs: For ICOs where the token is intended to function as a means of payment and can already be transferred, FINMA will require compliance with anti-money laundering regulations. FINMA will not, however, treat such tokens as securities.
- Utility ICOs: These tokens do not qualify as securities only if their sole purpose is to confer digital access rights to an application or service and if the utility token can already be used in this way at the point of issue. If a utility token functions solely or partially as an investment in economic terms, FINMA will treat such tokens as securities (i.e. in the same way as asset tokens).
- Asset ICOs: FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements under the Swiss Code of Obligations (e.g. prospectus requirements).
This may be flexible where a hybrid of the above is involved, e.g. anti-money laundering regulation would apply to utility tokens that can also be widely used as a means of payment (or are intended to be used that way in time).