Best Bitcoin Card for Switzerland
For the first time in Switzerland, an ordinance deals with digital currencies. In the fight against money laundering, Bitcoin is to be treated like cash.
The Financial Market Authority Finma is currently dealing with Bitcoin. In the future, the digital currency will be treated like cash in the fight against money laundering. This is the draft of the revised Money Laundering Ordinance.
Finma extends the scope of the Money Laundering Ordinance and explicitly rewrites in the draft “virtual currencies” that fall under it. The due diligence obligations for virtual currencies will be “put on an equal footing with those for the transfer of money and valuables”, as the explanatory notes state. This step is a novelty in Switzerland. This is the first time that Bitcoin and other crypto currencies have been explicitly included in a legal text.
Three transactions per second
The importance of Bitcoin is still marginal. Three transactions per second take place worldwide. Most of them are not used to buy goods and services, but to move assets, to a considerable extent for speculation on the stock markets.
Finma writes in its report on the regulation: “Virtual currencies, first and foremost Bitcoin, have been enjoying growing popularity and distribution both internationally and in Switzerland for a number of years”. Trading is associated with increased risks in the area of money laundering. Merchants are therefore required to comply with strict due diligence obligations, i.e. to identify the contracting parties in each case and record the beneficial owner.
The regulation has not yet been finalised, but the consultation process that has just taken place has at least shown that the Swiss Bitcoin industry is moving in the right direction. “Basically, we welcome every change that brings Bitcoin closer to recognition as a currency,” says the association Bitcoin Association Switzerland. This applies to the proposed innovations. And the DFCA – an association in Zug that specializes in compliance for digital finance companies – has also signaled its agreement in principle to the “lean regulatory approach” that Finma has chosen.
However, both the association and the association are opposed to the “virtual currency” terminology used by Finma. This term is tendentious and suggests that there is no real currency, only a fake one. Virtual currencies are air miles, loyalty points of all kinds and play money in online games for the DFCA as well as for wide circles in the Bitcoin industry.
Innovations every month
Bitcoin and other crypto currencies, on the other hand, would rather have the characteristics of common electronic money such as normal online banking money as means of exchange and payment in the real economy. The main difference is that there is no National Bank behind Bitcoin and the currency is not accepted as the legal tender for paying taxes.
However, the main problem for the regulator, too, is that the industry and technology are developing rapidly. New currencies and new digital units with very different characteristics are constantly emerging. It is no longer just about currencies in the traditional sense. Even established banks are already working on converting crypto currencies into bonds and issuing them. Too narrow a term could mean that Finma will need to revise its regulations again tomorrow.