Swiss regulators are investigating Ethereum ICOs over fake coin scandal

7 years ago - Published in Finance, Fintech Land, Technical Analysis

The Swiss financial regulatory board, Financial Market Supervisory Authority (FINMA), has increased its investigations into ICOs in Switzerland, according to a press release last week. The move comes after a substantial uptick in the number of ICOs based in the country, according to the document.

After noticing a marked increase in the number of initial coin offerings (ICOs) made in the country, Switzerland’s Financial Market Supervisory Authority (FINMA) has decided to take a closer look at this new, cryptocurrency-powered fundraising method.

ICOs allow startups to issue their own digital token to raise, in some cases, millions of dollars in a matter of seconds. They've come under scrutiny by regulators because companies are often able to raise money through an ICO without disclosing substantive information to investors.

The Swiss financial board has also indicated that many of the ICOs that are currently active have already likely breached existing law that regulates financial instruments within the country. These include money laundering and terrorist measures, securities trading provisions, investment scheme laws, and banking laws.

It's important to underline that Switzerland has been a major hub for this controversial method of raising funds from the public. Of the aforementioned $2 billion or more raised via ICOs worldwide in 2017, roughly $600 million has been raised by projects based in Switzerland.

In a report on the regulatory treatment of initial coin offerings released by FINMA on Friday, the regulatory body clarified that ICOs are currently not governed by any specific regulation in Switzerland; however, with their investigation, FINMA’s main goal is to see if some ICOs may have run afoul of existing regulations. 

As investigations continue, the Swiss regulatory body indicated that some action may be taken against those who have already violated policy. The document stated: “FINMA is currently looking into a number of different cases. Moreover, whenever FINMA is notified about ICO procedures that breach regulatory law or which seek to circumvent financial market law it initiates enforcement proceedings.”