By CCN Markets: Blockchain projects around the world have been seeking approval, or for that matter, concrete guidance, from regulators such as FINMA for the last several years. FINMA, the Swiss financial regulatory watchdog, has approved two requests for banking licenses. The two licenses were issued to blockchain businesses.
These regulatory strides are not likely to directly impact other jurisdictions but more so will impact how regulation is formed everywhere else. Only time will tell how these regulations impact innovation.
What a great day for Switzerland as a #Blockchain and #Crypto Nation! For the first time, #FINMA has issued banking and securities dealers’ licences to two pure-play blockchain service providers. The companies involved are SEBA Cry…https://t.co/qRsmfsRm6D https://t.co/I3HA2Yx6uA
— Alexander Schneuwly (@A_Schneuwly) August 26, 2019
Wait… Blockchain Businesses Got Banking Licenses?
FINMA issued banking licenses to both Sygnum AG and SEBA Crypto AG (SEBA) with several stipulations on their operations. The term Virtual Asset Service Providers (VASPs) refers to blockchain service providers such as exchanges, wallet providers and trading platforms. This new guidance requires that existing rules on combating money laundering also apply to DLT businesses and service providers.
What Other FINMA Stipulations Are There?
FINMA states that businesses must verify the identity of their customers, establish the identity of any beneficial owners, utilize a risk-based approach to monitoring business relationships, and file a report with the Money Laundering Reporting Office Switzerland (MROS) if there are reasonable grounds to suspect money laundering.
What Do The Projects Do?
Both projects are seeking to bridge the gap between functional DLT tech and older, more traditional finance aspects. Numerous projects have expressed a desire to be among the first to successfully blend these things but none have yet to prove fully successful. These two banking licenses do, however, represent a strong precedent for blockchain-based businesses moving forward.
Sygnum AG seeks to provide traditional banking and wealth management services with the efficiency of blockchain and DLT behind them. Asset management, brokerage, credit, and even tokenization fall within their intended offerings.
SEBA Crypto AG is focusing on asset management to start with a longer-term scope that includes transaction banking and storage custody services.