Imaginary Paradise: New regulations in Switzerland are ruining ICO projects

Imaginary Paradise: New regulations in Switzerland are ruining ICO projects

From the first day of the world ICO mania Switzerland showed a friendly attitude toward the blockchain startups. The Swiss c enthusiasm took the idea of cryptocurrencies, unlike other global regulators.

The country became an attractive location for companies of this sector, due to its favourable legal framework and transparency of doing business. Financial regulators welcomed the projects such as Tezos, Mysterium and Arcblock.

In February 2018, the Swiss Agency for financial markets (FINMA) has published recommendations for application of existing legislation on financial markets to regulate ICO. The aim was to bring clarity in terms of how to adjust the primary supply of coins.

FINMA CEO mark Branson as voiced his vision of the regulation:

Our balanced approach to the regulation of ICO projects will allow them to navigate the regulatory landscape and to start their projects so that the interests of investors were protected under the law.

However, the effect was the opposite.

Among the risks that were described in the 11-page document, mentioned the concern related to potential money laundering through crudely. In section 3.7 of the document says :

In the field of combating money laundering poses a number of requirements, including compliance with the rules of KYC and AML in respect of all participants in the ICO.

Read more for the procedure KYC ICO needs to use the services of a specialized Swiss company. That’s where the problems started.

In Switzerland only a few companies able to perform such inspections. They actually hold the monopoly. The average cost of KYC verification one participant ICO in the world ranges from 0.6 to 2 U.S. dollars. Switzerland in this issue has gone on all accrediting bodies charge a fee of up to $ 25 a head. It turns out that the average ICO need to pay about 30 thousand dollars, which puts the projects that have already made the decision about the launch of the ICO in Switzerland, in a very disadvantageous position.

As FINMA guidelines have no legal force, there is an alternative option is to completely ignore them and do not perform any verification. This strategy is fraught with risk, but some projects still chose her. In order to invest in such projects, it is sufficient to have an active profile in Facebook or Gmail account. Risky, but some startups are not ready for the extra costs.

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