On September 3rd 2018, FINMA published a new fact sheet on dealing with virtual currencies, such as "Bitcoin". The fact sheet provides information on licensing requirements under financial market law and risks associated with the blockchain technology.
Risks of buying and using virtual currencies
Although the purchase and sale, as well as the use of virtual currencies is possible without a license, it also bares risks. On the one hand, virtual currencies are subject to strong price fluctuations. On the other hand, the civil law treatment of claims arising from the use of virtual currencies has not been clarified, yet.
Money-laundering risks in virtual currency trading
Certain business activities in connection with virtual currencies may require a license. Due to the anonymity in trading and the decentralized structure of the blockchain, the risks of money laundering and terrorism financing have increased. The provision of payment and custody services for virtual currencies also falls under the Anti Money Laundering Act and requires registration with a self-regulatory organization or an application for direct supervision by FINMA.
Necessity for a banking license
If a business activity is carried out in which deposits are taken from the public in a professional manner, this may require a banking license. This also applies if the deposits are taken in the form of virtual currencies and are kept on own "wallets". The requirement of a banking license may be waived if the deposits can be allocated to an individual customer at any time or if they are only transferred for safe custody.
Authorization requirement for other blockchain applications
Depending on the structure of the virtual currency, a license may be required under a different financial market Act such as the Stock Exchange Act or the Financial Market Infrastructure Act.
FINMA investigations
If there are specific indications for an activity with virtual currencies requiring a license, FINMA can open investigations on the basis of this information. If the suspicion is confirmed, FINMA may, among other things, open an enforcement procedure and restore the legal status.
Additional Insights
Further information on virtual currencies can be found on the fact sheet from FINMA.
