Swiss regulator approves banking license for crypto banks; updated KYC AML rules follow

As crypto businesses have started to make the move into crypto-friendly geographies to avoid risk of shutting down, Switzerland made headlines on the other side of this spectrum by announcing banking licenses to two cryptocurrency-focused banks. According to the official report,

“For the first time, FINMA has issued banking and securities dealers’ licences to two pure-play blockchain service providers. The companies involved are SEBA Crypto AG registered in Zug and Sygnum AG registered in Zurich, which will offer services for institutional and professional customers.”

The Swiss Financial Market Supervisory Authority (FINMA) also shared guidelines on updated KYC and AML rules for the financial institutions. While this can be considered as a milestone toward crypto adoption, FINMA clearly warned that “various conditions are attached, ensuring that the businesses are set up in an orderly manner.” Bringing in more clarity into the crypto-banking license, the notice highlighted that,

“The institutions supervised by FINMA are only permitted to send cryptocurrencies or other tokens to external wallets belonging to their own customers whose identity has already been verified and are only allowed to receive cryptocurrencies or tokens from such customers.”

It is important to note FINMA contrasted its decision with the FATF standard by mentioning that “this established practice applies in Switzerland without the exception for unregulated wallets and is therefore one of the most stringent in the world.” While the “regulation war” is yet to find the sweet spot for crypto-fiat synergy, U.S. based crypto businesses such as Chainalysis have started to urge FATF to rethink their stringent guidelines to retain the existing businesses.