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Swiss Markets Authority Investigates Troubled $100 Million ICO

The Swiss Financial Market Supervisory Authority (FINMA) announced Thursday that it is investigating blockchain startup Envion AG for potentially breaking financial market rules with its initial coin offering (ICO).

Envion, which raised $100 million in the ICO earlier this year, has allegedly broken banking laws by accepting public deposits in exchange for its EVN token, despite such transactions not being allowed, according to a FINMA press release.

The regulator states:

“Investigations carried out by FINMA to date indicate that, in the context of its ICO, envion AG accepted funds amounting to approximately one hundred million francs from more than 30,000 investors in return for issuing EVN tokens in a bond-like form.”

The enforcement proceedings are only the latest setback for the startup, which has been in limbo for months after its executives began accusing each other of wrongdoing.

The New York Times reported in May that the firm’s chief executive, Matthias Woestmann, had claimed that the founders generated extra EVN tokens as part of a money grab. The founders, on the other hand, claimed that Woestmann had seized control of the firm and breached his contract.

Swiss flag image via Shutterstock

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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Blockchain Tops 2017 Fintech Enquiries, Says Swiss Finance Regulator

Enquiries around blockchain, cryptocurrency and initial coin offerings (ICOs) in Switzerland have increased significantly last year, according the country’s financial regulator.

In its annual report for 2017, published Tuesday, the Swiss Financial Market Supervisory Authority (FINMA) said that, out of the 453 fintech enquiries it received last year, 60 percent of them (271 cases) were focused on blockchain, cryptocurrency, ICOs and smart contract applications.

The number marks a nearly three-fold growth compared to 2016’s data, when FINMA saw only around 60 blockchain-related enquires out of a total 270 cases (22 percent).

The growth in enquiries around blockchain tech comes at a time when the Swiss regulator has placed the topic as the center of its supervisory work, the agency said, adding that questions around ICOs are becoming increasingly frequent.

“Especially in the second half of the year (2017), there was a sharp increase in enquiries about raising capital via ICOs,” FINMA commented in the report.

Notably, the Swiss regulator took measures in September of last year to investigate ICOs that were deemed suspect by the agency, ultimately ordering the closure of three entities tied to an alleged scam called E-coin.

And, just last month, FINMA also updated its guidelines on how its will treat various tokens issued through ICOs, saying it will treat some as securities. The agency said it would examine tokens on a case-by-case basis, outlining three main categories to further clarify the process.

In a news conference on Tuesday, the agency’s chief executive, Mark Branson, said his agency is confident in the efficiency of the new guidelines and is now actively examining ICOs already completed under the new framework, according to Reuters.

Switzerland image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Swiss Finance Regulator to Treat Some ICO Tokens As Securities

Switzerland’s finance regulator has published new guidelines that indicate it will treat some tokens sold during initial coin offerings as securities.

In a press release published today, the Financial Market Supervisory Authority (FINMA) said there has been a sharp rise in the number of ICOs launching in Switzerland, resulting spike in inquiries about the regulations that apply to them.

With the situation currently “partly unclear,” the new guidelines have been released to clarify the status of projects wishing to launch a token sale project within the country.

“Creating transparency at this time is important given the dynamic market and the high level of demand,” the authority states.

Notably, FINMA will determine the applicability of regulation to crypto tokens on a case-by-case basis, taking a similar stance to that of the U.S. Securities and Exchange Commission in guidance released last July.

When assessing ICOs, FINMA said it will focus on the “economic function and purpose of the tokens,” with the “underlying purpose of the tokens and whether they are already tradeable or transferable” being primary factors in how they will be classified.

The agency outlined three categories of tokens – while acknowledging that hybrids are possible – and set out the likely regulatory stance for each as follows. These include “payment tokens,” “utility tokens” and “asset tokens,” the latter of which would land in the securities category.

“FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements under the Swiss Code of Obligations,” the regulator said.

While conceding that blockchain technology has “innovative potential within and far beyond the financial markets,” FINMA CEO Mark Branson said in the release that ICO projects held “analogously to regulated activities cannot simply circumvent the tried and tested regulatory framework.”

The Swiss watchdog first said it was investigating initial coin offerings to determine whether they were following banking and securities laws in September 2017.

At the time it said it was examining “a number of ICO cases to determine whether regulatory provisions have been breached.”

Swiss flag image via Shutterstock

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Swiss Finance Regulator Is 'Investigating ICO Procedures'

Switzerland’s top financial markets regulator has launched an investigation into initial coin offerings (ICOs).

Though it didn’t name any specific token sales, the Swiss Financial Market Supervisory Authority said today that it is examining “a number of ICO cases to determine whether regulatory provisions have been breached.” Specifically, the regulator wants to see whether organizers of ICOs, who sell cryptographic tokens in a bid to bootstrap blockchain networks, have violated any laws around anti-money laundering, securities or collective investment schemes.

FINMA said:

“Given the close resemblance, in some respects, between ICOs/token-generating events and conventional financial-market transactions, one or more aspects of financial market law may already cover ICO campaigns according to their various models. FINMA is currently looking into a number of different cases.”

That the agency would begin investigating the funding use case in Switzerland is perhaps unsurprising, given the growing number of regulators that have undertaken such actions in recent months. For example, South Korea’s government unveiled new measures today to restrict ICOs, stating that token sales run afoul of domestic capital market slaws. That move followed a similar crackdown in China earlier this month.

Yet how the situation in Switzerland will develop remains to be seen. According to FINMA, ICOs are not regulated under Swiss law because they do not have a third-party intermediary and are launched for one own’s platform. However, that does not mean ICOs are completely free from legal obligations, the agency went on to say.

“Due to the underlying purpose and specific characteristics of ICOs, various links to current regulatory law may exist depending on the structure of the services provided,” FINMA wrote.

Image Credit: Lee Yiu Tung / Shutterstock.com.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].