Crypto Startups can manage up to $ 100 million of deposits

December 4, 2018 Bitcoin

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Economics and regulation

Crypto-active companies can now apply for licenses to manage up to 100 million Swiss francs ($ 100 million) in public deposits according to the new rules published on December 3 by the Swiss Financial Market Supervisory Authority (Finma). The development highlights the efforts made by the European country to promote technological innovation, since in the past only commercial banks could receive deposits of this entity.

Read also: The Australian financial authority grants the Bitcoin coin exchange license

Companies can not reinvest or pay interest on deposits

There's a problem, anyway. The companies linked to the blockchain and the cryptocurrency that have obtained the fintech licenses to manage large amounts of funds of investors "can not invest" or "pay interest" on deposits, according to the new guidelines, which will come into force on 1 January 2019.

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In addition, shareholders who hold, directly or indirectly, 5% or more of the issued capital of a company must be disclosed to Finma. The same applies to foreign shareholders holding equivalent holdings. Finma has stated that companies must provide any information on agreements, such as transactions with shareholders, and "other ways in which the applicant can be controlled or materially affected".

"The license application must contain a detailed justification," he added. "All relevant information must be documented and even the modified documents must be sent with the changes tracked."

Promote innovation, stem the flow

The fintech license was created after the Swiss parliament amended the banking law at the beginning of this year, in a move to promote innovation in the cryptocurrency sector. In February 2017, the Swiss Federal Council issued three consultation measures to promote innovation in the financial sector and remove barriers to market entry for financial technology companies.

Two of these measures – the extension of the holding period for settlement accounts and an authorization-free innovation area, or sandbox – entered into force on August 1, 2017. And with the & # 39; announcement of the new legal changes, it is now possible the third measure – a new category of authorization with simplified requirements in the banking law – will come into force on New Year's Day. In addition, the sandbox will be extended to include crowdlending business models, whereby public funds of up to $ 1 million in total may one day be mediated for commercial and industrial purposes, as well as for private consumption.

A number of countries in continental Europe are now facing the loss of numerous digital money assets in competing offshore jurisdictions such as the British Virgin Islands, Gibraltar and the Cayman Islands, where regulation is less stringent. But Switzerland, with its encrypted tax haven of Zug, seems intent on curbing the flow.

Progressive Stance

The country has taken a progressive stance towards cryptocurrencies by legalizing their use and formalizing cryptographic transactions in a range of different contexts. But some encryption projects are still struggling to open bank accounts and bankers and investors focused on cryptocurrency still complain about a relative lack of regulatory clarity, as it is not clear whether cryptocurrencies can be considered of legal value in certain contexts.

Switzerland sees virtual currency and blockchain technology as strategic innovations in global finance. It is therefore determined to maintain and expand the jobs it has to offer in the field. The country's tax authority considers cryptocurrencies as assets that should be subject to wealth taxes and declared on the annual tax return.

According to reports, Zug – also known as "Crypto Valley" – is favorably positioned among the most crypto-friendly destinations in the world, boasting more than 400 cryptographic businesses. Four of the 10 largest ICOs of 2017 have been registered in Switzerland, which is more than any other country, according to a PwC report.

What do you think of the Finma decision? Let us know in the comments section below.

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Crypto Startups can manage up to $ 100 million of deposits

Companies can not reinvest or pay interest on deposits

Promote innovation, stem the flow

Progressive Stance

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