CFTC equated tokens to exchange products

The Commodity Futures Trading Commission released the first part of a series of explanatory materials related to ICO tokens
18 October 2017   546

LabCFTC, fintech-initiative of The Commodity Futures Trading Commission (CFTC), published the first part of a series of explanatory materials, which describes the basics of blockchain technology and some scenarios for its application. This is written by CoinDesk.

In the 20-page document, a special attention was drawn to the section emphasizing that since 2015 the CFTC has maintained an unchanged position relative to bitcoin and other crypto-currencies, classifying them as exchange products.

Separately, the CFTC notes that there is no discrepancy in the position of the SEC on crypto-currencies.

The CFTC looks beyond form and considers the actual substance and purpose of an activity when applying the federal commodities laws and CFTC regulations. Conduct extensive research before giving any money or personal information to a virtual currency platform.
 

CFTC report

Each project will be considered individually, and all facts and circumstances will be taken into account when deciding, says the CFTC.

In addition, the CFTC recalls the need to conduct a thorough study of crypto-exchange platforms before trusting their own funds or personal information.

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Swiss Regulators Published ICO Guidelines

The Swiss Financial Market Supervisory Authority FINMA published today initial coin offering (ICO) guidelines  
16 February 2018   156

The guidelines set out how it intends to apply financial market legislation in handling inquiries from ICO organizers. According to it, regulators will oversee and regulate ICOs anti-money laundering laws.

FINMA clarifies how token issuers should proceed in the country. The regulator also stated that there is a sharp increase in the number of Switzerland-based ICOs. This led to questions about applicable regulations.

The press release noted that financial market law and regulation aren’t applicable to all ICOs. Each case must be decided on its individual merits.

The regulations will be based on economic function and purpose of the tokens issued by the ICO organizer. Due to the fact that there is no generally recognized terminology for the classification of tokens in the world,  FINMA categorizes tokens into three types:

  • Payment tokens are synonymous with cryptocurrencies and have no further functions or links to other development projects.

  • Utility tokens are tokens which are intended to provide digital access to an application or service.

  • Asset tokens represent assets such as participation in real physical underlyings, companies, or earnings streams.  

FINMA will handle ICO inquiries according to three different categories, based on the type of tokens they’ll be issuing.

  • Payment ICOs (payment tokens), that issue tokens that are transferable and function as means of payment.

  • Utility ICOs (utility tokens), that will not qualify as securities, as long as their purpose is to confer digital access rights to an application or service. If a utility token functions as an investment in economic terms, it will be treated as a security.

  • Asset ICOs (asset tokens), that issue tokens that will be seen as securities. This means they’ll be treated like equities or bonds. These will be subject to strict requirements.

Our balanced approach to handling ICO projects and inquiries allows legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.

Mark Branson

FINMA CEO