Блог
SICP PASSED STATE REGISTRATION IN THE FEDERAL SERVICE FOR INTELLECTUAL PROPERTY OF THE RUSSIAN FEDERATION
Written by Aleksandr Podobnykh
The quarantine situation causes the rapid development of distance services, as well as the widespread use of contactless payments and electronic currencies. At the same time, a significant event took place on the Russian cryptocurrency market. A few days ago, the SICP platform team received a notification from the Federal Intellectual Property Service of the Russian Federation about the state registration of a computer program (03/18/2020 No. 2020613600) - Security Intelligence Cryptocurrency Platform (SICP) or Cognitive (corporate) analytics system Transaction Cryptocurrency Asset.
The platform’s web services are designed to provide cybersecurity for the infrastructure of blockchains (distributed registries) and implement anti-fraud measures in the field of cryptocurrency circulation. Functionality: risk assessment of Digital Assets; cryptocurrency investigations; conducting complex events in the field of cryptocurrency circulation; cryptocurrency wallet and ICO reliability assessment; tracking transactions correlating with a real object (organization); ordering advice on the possibility of an investigation (and the collection of necessary evidence); Advanced analytics of public blockchains and reports on suspicious transactions and related objects.
Today, a large number of SICP users leave user ratings about crypto-wallets and transactions, researchers actively use the SmartEcho and CryptoSonar services to evaluate crypto-wallets and visualize research (investigation) scenes, experts use CryptoSonar and MetaSphere services to save scenes and analyze the wallet and transaction pool (by internal tags).
In your personal account, verification tools are available for owners of crypto-wallets and even crypto-firms, with obtaining the appropriate status (and the ability to share certificates on social networks and on sites). There is the possibility of monitoring wallets for incoming / outgoing transactions (other events), saved scenes and functionality for conducting joint investigations (by registered users).
It is noteworthy that it is on Cosmonautics Day that we will announce this event! .. A significant step, if not for the entire global financial and technological sector, then surely for the entire industry of end-to-end technologies...
Source: K4Y0T Project.
LAWYER APPRECIATED THE PLANS OF CENTRAL BANK TO CHANGE THE GROUNDS FOR BLOCKING ACCOUNTS
Written by Manuylova Natalya
Natalya Manuylova, a forensic expert and teacher at the Moscow Digital School, commented on the Bank of Russia’s plans at the request of Izvestia to clarify the signs that could cause banks to consider their clients' actions suspicious.
The list of reasons for blocking an account has not been changed since they appeared in March 2012. Earlier, on February 17, it became known that the Central Bank proposes not only to introduce new criteria, but also to exclude some of the more than 100 existing ones, according to which banks recognize transactions as doubtful.
“The Bank of Russia revised the list of unusual transactions, excluding a number of signs, and added new signs taking into account the realities of the financial market. It is worth noting that the list of unusual operations only orient banks to pay special attention to operations that have signs of unusual. Unfortunately, quite often confused are signs of dubious operations and operations that have signs of unusual ones”, the expert added.
Regarding the qualifications of operations with digital and virtual assets, much will depend on the qualifications of bank employees, Natalya Manuylova added.
According to her, if bank employees do not have enough qualifications, then Rosfinmonitoring will replenish with information about operations that are not related to dubious ones.
Moreover, the market will resume pressure on the business to provide documents not related to the operation, threats to block customer accounts, delays in operations.
“For example, the symptom in section 11,“ The transaction is related to the acquisition or sale of virtual assets ”should be adapted for banks in the existing risk management system. The Bank should develop its own additional criteria for qualifying such an operation as “doubtful,” for example, the amount of the transaction, the business reputation of the counterparty, the counterparty’s bank, and so on. Considering that a number of signs are quite common, I think that the Bank of Russia is waiting for a rather large number of requests from both banks and customers, but here it’s already in the form of complaints, ”concluded the forensic expert.
In February, Russian Prime Minister Mikhail Mishustin, during a meeting with the head of Sberbank German Gref, said that the bank’s technologies and services would be used to simplify the life of Russians and to create a state-owned digital platform.
Source: IZ.ru
The world is divided into parts regarding the cryptocurrency environment. Some advocate a ban on digital currency, others offer only some restrictions, and some states impose a complete ban on cryptocurrencies. The motivation for the ban and restrictions on cryptocurrency is the fight against crime and money laundering.
So the State of Qatar has added to the list of countries with a ban on the circulation of cryptocurrency. A statement by the Qatar Financial Center regulator states that "Virtual Asset Services cannot be held in or out of QFC at this time." It stated that the ban included “anything valuable that replaces a currency, can be sold or digitized and can be used for payment or investment”.
Simplecoin, a Netherlands-based cryptocurrency 'mining pool' set up to enable collaborative discovery of new virtual currency coins, and Chopcoin, a Bitcoin gaming platform, announced they would be shutting down before the EU Fifth Anti-Money Laundering Directive (5AMLD), came into effect in all EU Member States on 10 January 2020.
The 5AMLD requires providers of crypto platforms and wallets to identify their customers for anti-money laundering purposes.
Source: Intelligence for the Global Adviser and Wealth Manager.
RUSSIAN FEDERATION'S MEASURES TO COMBAT MONEY LAUNDERING AND TERRORIST FINANCING
Written by Aleksandr Podobnykh
Paris, 17 December 2019 - The Russian Federation (Russia) has an in-depth understanding of its money laundering and terrorist financing risks and has established policies and laws to address these risks, but it should enhance its approach to supervision and prioritise the investigation and prosecution of complex money laundering cases, especially concerning money being laundered abroad.
The Financial Action Task Force (FATF), the Eurasian Group and MONEYVAL, assessed Russia’s anti-money laundering and counter terrorist financing (AML/CFT) system. The assessment is a comprehensive review of the effectiveness of Russia’s measures and their compliance with the FATF Recommendations. This includes an assessment of its actions to address the risks emanating from UN and domestically designated terrorists and terrorist organisations. The report does not address the justification that led to the domestic designation of an entity as a terrorist or terrorist group or organisation.
Russia recognises that it faces significant money laundering risks as a result of the proceeds of crimes committed within the country, in particular those related to corruption and its role as both a transit and destination country for narcotics trafficking. A national risk assessment, complemented by in-depth knowledge of relevant law enforcement agencies, has allowed the country to identify and understand its risks, including terrorist financing risks. Russia’s legal framework appropriately addresses these risks and the country has formal policies in place, supported by strong domestic co-ordination and co-operation, to combat money laundering and terrorist financing. However, the country needs to address gaps in its ability to freeze, without delay, assets linked to terrorism, financing of terrorism and proliferation of weapons of mass destruction, and ensure that this freezing obligation extends to all natural and legal persons.
In general, Russia cooperates with foreign counterparts, including through more than 100 international co-operation agreements with its financial intelligence unit, Rosfmonitoring. Authorities make excellent use of financial intelligence, based on a wealth of collected data and analysed with sophisticated technologies to contribute to money laundering and terrorist financing investigations. While the country has prioritised getting money back for the victims of crimes – around EUR 816 million per year – it needs to focus more on the investigation and prosecution of complex money laundering cases, especially concerning money being laundered abroad.
Russia has strengthened its oversight of the banking sector and has now mitigated the risks of criminals being the owners or controllers of financial institutions. However, deficiencies in licensing remain and the sanctions for banks that do not comply with AML/CFT requirements are not effective or dissuasive.
In general, financial and certain non-financial entities such as accountants and auditors, have a good understanding of how their services could be used to launder the proceeds of criminal activity or terrorist financing, but given that Russia is a significant centre for mining precious metals and stones, this sector’s understanding of risk is not in line with the country’s risk assessment.
Since its last assessment in 2008, Russia has strengthened its understanding of the money laundering and terrorist financing risks it faces and has developed a robust legal framework to address them. The country has taken a number of actions that have delivered concrete results. But, the country needs to address the areas of weakness this report has identified.
The FATF adopted this report at its October 2019 Plenary meeting.
OPERATORS OF INVESTMENT PLATFORMS ARE OBLIGED TO ORGANIZE MEASURES TO AML/CFT
Written by Manuylova Natalya
From 01.01.2020, a new entity will appear on the financial market - the operator of the investment platform. In accordance with subparagraph 7) of clause 1 of article 2 of Federal law dated 02.08.2019 No. 259-FL "On attracting investments using investment platforms and on amending certain legislative acts of the Russian Federation" the operator of the investment platform is a business company created in accordance with the legislation of the Russian Federation, carrying out activities to organize investment attraction and included by the Bank of Russia in the register of investment platform operators.
It is worth noting that from 01.01.2020 the amendments to the Federal Law of 07.08.2001 also come into force. No. 115-FL "On combating the legalization (laundering) of proceeds from crime and the financing of terrorism" (hereinafter - Law No. 115-FL), according to which:
1. Operators of investment platforms become the subject of Law No. 115-FL (Supplement to the first part of Article 5 with a new fourth paragraph of the above law);
2. The operators of investment platforms are entrusted with the obligations specified in Article 7 of Law No. 115-FL, including the application of measures to freeze (block) money or other property in accordance with the requirements established by subparagraph 6 of paragraph 1 of Article 7 of Law No. 115- Federal Law.
3. The operators of investment platforms have been granted the rights specified in Article 7 of Law No. 115-FL, in particular:
- simplified identification of investment platform operators with respect to customers in certain cases, namely: when concluding agreements on the provision of investment assistance services involving investment using the investment platform for an amount not exceeding 100,000 rubles, provided that all settlements are carried out exclusively in non-cash form on accounts opened with a Russian credit institution;
- an assignment of the identification procedure to third parties - on the basis of the contract to entrust the credit organization with the identification or simplified identification of the individual customer, as well as the identification of the client’s representative, beneficiary and beneficial owner.
4. The internal control rules of the Investment Platform Operators are developed taking into account the requirements approved by the Central Bank of the Russian Federation in agreement with the authorized body, and approved by the head of the organization.
5. Qualification requirements for special officials responsible for the implementation of internal control rules, targeted internal control rules, as well as requirements for training and education, identification of clients, client representatives (including identification of the sole executive body as a representative of the client), beneficiaries and beneficial owners are determined in accordance with the procedure established by the Bank of Russia.
Please note that non-compliance with the requirements of Law No. 115-FL entails the prosecution of an official and organization on the basis of Article 15.27 of the Code of Administrative Offenses of the Russian Federation. The consequences of non-compliance with the requirements of the AML/CFT legislation May result in criminal prosecution.
For questions regarding the organization of work on the implementation of Law No. 115-FL and training, write to This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it..
THE ROUNDTABLE PARTICIPANTS LEARNED ABOUT THE FEATURES OF SMART CONTRACTS
Written by Manuylova Natalya
On November 5, 2019, a round table was held at the Moscow Chamber of Commerce and Industry on the topic: “Electronic Commerce. Smart contracts. New Opportunities of the Digital Economy ”, which discussed the main problems of legal support of electronic commerce.
At the event, the main trends of the digital economy were presented and the state of legal regulation of this sphere was outlined. According to Suren Vardanyan, Vice President of the Chamber of Commerce and Industry, opening the meeting, the Chamber pays special attention to digitalization issues: digital products are being developed that allow entrepreneurs to receive new services, and the Chamber follows the main economic trends. “We try at all the events that take place within the walls of the MCCI to develop specific proposals, which we then pass on to the authorities and all interested departments,” Vardanyan emphasized.
According to Igor Sudets, Deputy Director of the Digital State Development Department of the Ministry of Digital Development, Telecommunications and Mass Media of the Russian Federation, 17 draft laws are currently being drafted to regulate the main directions of digitalization of the Russian economy. In the near future it is expected that the Government will give instructions on the preparation of about 60 more draft laws. For example, the draft law on digital financial assets has already undergone seven editions, but has not yet been submitted to the State Duma. Now the eighth version of the document is being prepared. The total budget allocation for federal projects related to the implementation of digital technologies is 1634.9 billion rubles. The main national programs being implemented now, according to Igor Sudets, are a training program for the digital economy; digital infrastructure creation; digital technology development; digital security; development of legal regulation and the creation of digital state regulation. As for the latter, as stated by the representative of the Ministry of Communications, the basic principle of digital government is “a person does not need to know which authority he interacts with. He sends a request, and the state executes it. " Moreover, according to the expert, “the state itself should come to us”: after some time, every citizen can receive push notifications about what actions he needs to take: pay taxes, replace a driver’s license, etc.
Artem Dalevich, Vice President of the ICIE, spoke about the implementation of the secure transaction mechanism using escrow accounts on the Business Market platform, developed and implemented by the MCCI
Since lawyers made up a large share of the roundtable audience, one of the main topics of discussion was the legal regulation of electronic commerce. Senior Associate at Rödl & Partner Alexandra Nechaeva spoke about the main risks that accompany the conclusion of contracts in online trading. It was, in particular, about the interpretation of the concept of an offer and the moment of its receipt, as well as about the differences between online and distance trading. The speaker emphasized that there is no definition of electronic commerce in the legislative field, which leads to a rather arbitrary interpretation of the electronic commerce process in judicial practice. In addition, Alexandra Nechaeva said that Russia has not developed approaches to determining the jurisdiction of transactions involving foreign elements. Summing up her speech, the speaker noted that “the problems of determining jurisdiction are now one of the first in matters of the digital economy”.
Svetlana Mochalina, head of the risk management department at L'Occitane, spoke about the legal risks of an international company in the retail industry in Russia. A franchise firm defended its interests by registering trademark rights. This almost completely prevented parallel sales.
The topic of the speech of DDC Ltd Director Ilya Mikheev was smart contracts. Since this is a very promising form of digital agreements, the message caused serious interest from the audience. According to the expert, for the first time a smart contract appeared a long time ago - in 1996. “In principle, a smart contract is a computer code that guarantees the fulfillment of obligations subject to all agreed conditions,” the speaker explained. Another important distinguishing feature of a smart contract is that it must be hosted in a decentralized, trusted environment. Such an environment is guaranteed, in particular, by blockchain technology. Smart contracts are already used, for example, in diamond verification.
The representative of the company-operator of fiscal data OFD.ru Dmitry Pogozhev talked about the currently introduced product labeling system, its advantages and disadvantages.
Summing up the round table, the moderator of the meeting, forensic financial expert Natalya Manuylova noted that "the digital economy is not only cryptocurrency and blockchain." The main purpose of the event was to identify the risks that entrepreneurs face in introducing digital technologies, and to outline ways to minimize them, including using compliance procedures.
The Advisor to the President of the MCCI Marina Evteeva thanked all the speakers and participants for the informative conversation and assured that all the proposals that were voiced would be summarized and brought to the attention of the leadership of the chamber.
The event was supported by the Government of Moscow and the Department of Economic Policy and Development of Moscow...
SEVENTH ACISO CONFERENCE IN MOSCOW (INFORMATION TECHNOLOGY SECURITY)
Written by Aleksandr Podobnykh
The seventh conference of ITS Moscow 2019 will be held on November 29 of the current year (at 13:00, Skolkovo Technopark). At the event, a report on the work for 10 years from the Chairman of the Management Board, Viktor Vladimirovich Minin, will be presented.
This year ACISO is celebrating its 10th anniversary. The Association brought together ambitious, successful, talented experts in the field of information security. Also in the program are reports of ACISO Members: Alexander Mishurin, Mikhail Smirnov, Alexander Pershin, Konstantin Samatov, etc.
After which, it is planned to hold the Reporting and Election Conference of ACISO. It is held every two years and is obligatory for visits by all members of ACISO. If a member of the Association does not have the opportunity to attend the event, he draws up a power of attorney for the right to vote.
Source: ACISO.
THE FEDERATION COUNCIL DISCUSSED CURRENT TRENDS IN THE LEGISLATIVE REGULATION OF THE DIGITAL TRANSFORMATION OF THE ECONOMY
Written by Manuylova Natalya
The Chairman of the Federation Council Committee on the Rules and Organization of Parliamentary Activities, Vyacheslav Timchenko, held a round table on the topic "Current Trends in the Legal Regulation of the Digital Transformation of the Economy."
The senator noted that the Federation Council pays great attention to the topic of legal regulation of the digital economy.
“In the upper house of the Russian parliament, an expert advisory body is constantly operating - the Council for the Development of the Digital Economy under the leadership of Deputy Chairman of the Federation Council Andrei Turchak,” said Vyacheslav Timchenko.
According to the parliamentarian, when developing legislative initiatives, it is important to take into account the opinion of the professional and expert communities. “This will create the regulatory framework necessary for the development of breakthrough technologies,” the head of the Federation Council Committee emphasized.
The meeting discussed the legal regulation of the digital economy and services, as well as considered bills that allow the introduction of modern methods in various fields. The participants made suggestions and presented a number of amendments to the documents under discussion.
The discussion was attended by listeners of the program “Legal foundations and legal practices of working with cryptocurrency and blockchain projects” of the G.V. Plekhanov.
During the event, Vyacheslav Timchenko supported a number of initiatives prepared by students in the learning process.
Source: Council of the Federation of the Federal Assembly of the Russian Federation.
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IT BECAME KNOWN ABOUT THE STRANGE TRANSFERS NAVALNY BEFORE LARGE SHARES
Written by Bederov Igor
All investigations and political actions of blogger Alexei Navalny begin immediately after large cash receipts come to his bitcoin wallets, the owner of Internet-Rozysk, Igor Bederov, told the Krasnaya Vesna correspondent on November 6.
He said that his company is developing unique services for the prevention and investigation of crimes intended for law enforcement and security services: “You should start the story with the fact that we are developing the first domestic service designed to trace cryptocurrency transactions - SICP | Security Intelligence Cryptocurrencies Platform."
Igor Bederov recalled that Navalny “uses several cryptocurrency bitcoin wallets to finance his activities,” and spoke about the results of monitoring the status of these wallets.
“What are these wallets? The first wallet 3QzYv * (the wallet number is at the disposal of the publisher) was used in 2691 transactions. In total, 633.28146173 Bitcoins came to this wallet, which is 378 196 391.89 rubles. at today's rate.
The second 3MQTR wallet * (wallet number is at the disposal of the publisher) was used in 666 transactions. A total of 72.80104198 Bitcoins came to this wallet, which is 43,476,863.08 rubles. at today's rate, ”the specialist shared information.
He drew particular attention to the fact that the activities of the opposition are “tied” to the proceeds of his Bitcoin wallets: “During the monitoring of these wallets, we clearly see that all his investigations or political actions take place immediately after receiving a large monetary tranche.”
Igor Bederov noted the difference between such large tranches and the receipt of money from Navalny’s supporters: “Such tranches are very specific and very different from the usual donations from FSC supporters. An ordinary supporter of Navalny can transfer him an amount of 100 rubles. and up to 15 thousand rubles. maximum. And these are direct transactions that go from wallet A to wallet B.
At the same time, large transfers that precede stocks and FSC investigations start at 3 million rubles. And these transactions are far from simple. They mix bitcoins, hide information about their real sender in a heap of parallel transactions."
In conclusion, he emphasized that after the analysis it was possible to establish that the sender of such tranches may be located in the USA: “However, we were able to analyze several chains of such transactions and determine that the probable sender of funds may be located in the United States.”
Note, on October 9, the Ministry of Justice of Russia recognized FSC as a foreign agent.
And in mid-October in 30 headquarters of the headquarters of the Anti-Corruption Fund, the Investigative Committee of the Russian Federation conducted searches. They took place in the framework of the criminal case of money laundering by FSC employees, as well as their receipt of money from abroad. FSC accounts were arrested.
On November 5, the Levada Center released data according to which a third of Russia's residents call criminal cases against the Navalny Fund protection of the country from foreign influence and the fight against money laundering.
Source: Red Spring.
BEYOND REALITY: ACISO CONFERENCE (INFORMATION TECHNOLOGY SECURITY)
Written by Aleksandr Podobnykh
Colleagues, the Association of Chiefs of Information Security Officers (ACISO) invites you to the 8th annual conference of ITS St. Petersburg 2019 (October 10, Prospect Medikov 3-A). Continuing the theme of the year: Beyond reality. The meeting participants will discuss issues of protecting information and the individual as a whole.
Welcoming remarks by the Chairman of the Board of ACISO - Victor Minin, and acquaintance with invited experts will open the event. The program has 3 sections planned, in one of them I will speak, in the light of work on the SICP project: Patrolling blockchains and investment security in the field of cryptocurrency circulation...
In addition, a round table with regulators will be held at the conference, as well as the 2nd version of the manual on the safety of СII (Critical Information Infrastructure) objects of the organization (each participant will get it)!
Source: ACISO.
CLOUDTOKEN - 150X PROFIT OR PYRAMID SCHEME?
Written by Dobryshkin Sergey
Since the spring of this year, a project called CloudToken is actively developing and promoting the network, positioning itself as "the first wallet in the world that integrates all crypto assets of the blockchain on one platform." Their goal is to provide project participants with a special ecosystem of public savings.
The project supports 7 major cryptocurrencies and stablecoins, 21 referral levels, has a mobile application (wallets in leading marketplaces) and offers its participants a yield of 6 to 12% per month, as well as 150-fold profit (!) For 2019. At the same time, the first participants (top of the pyramid?) Are promised support for the issuance of payment cards.
The project attracts its participants (the number of which, according to some estimates, has already exceeded 800,000 people) with the help of the so-called "network leaders" from around the world. For example, in Russia and neighboring countries, Pavel Chernyshev is engaged in resource promotion.
Information on the project website is presented in English and Chinese, the legal entity Cloud Technology and Investment Pty., LTD is registered in Australia, and the United States is indicated as the geolocation of the site. Currently, 145 countries are involved in the scheme.
The process of making a profit is described on the resource as follows:
1. Participants send funds to ETH / BTC in the Jarvis bot asset management pool.
2. A tool called Varoom collects data from over 38 cryptocurrency exchanges.
3. Varoom transfers assets to the Jarvis AI BOT.
4. Varoom instructs Jarvis.
5. Jarvis trades on exchanges.
6. Information is collected on the latest prices at CoinMarketCap.com.
7. Members receive rewards in CTO tokens.
8. The rest of the earned funds are transferred to the Jarvis Asset Reserve.
9. Jarvis Asset Reserve supports the rate in the conversion wallet.
10. Participants can convert CTO to ETH, BCH or other cryptocurrency at any time.
The mobile application offered for download is positioned as a cryptocurrency multi-wallet with passive income (while funds can be sent in only one direction), as well as a trading bot (without confirming trading volumes). Nevertheless, judging by the volumes, the funds received from participants (victims?) Are immediately transferred to controlled sites and cold wallets.
According to an investigation conducted by the experts of the cybersecurity resource SICP (sicp.ueba.su), the total amount of funds that have passed through only one wallet currently exceeds 6 billion rubles, and this figure is constantly growing.
In particular, as a result of the investigation, it was found that all the main assets of the CloudToken project are transferred to the South Korean crypto exchange Upbit, and also are withdrawn through wallets in Thailand (in some cases they are frozen).
Below is some more evidence that the CloudToken project is just another pyramid scheme.
1. Despite the fact that the organizers of the project position it as a “completely decentralized cryptocurrency wallet”, in fact it’s hard to even call it a wallet. In fact, users only get access to the server, where they see their tokens. Judging by the CloudToken tracker on Etherscan, all it can boast of is 4 addresses and 5 transactions, with 99.9999% of the funds held at one address. Thus, buyers give their money, but do not become owners of the coveted tokens.
2. In the promotion of the service involved people who have repeatedly advertised fraudulent schemes.
3. Lack of evidence of trading using the Jarvis bot. Although representatives of the project claim that they generate profit using the Jarvis AI Bot bot, which is used for arbitrage trading on exchanges, there is no evidence of such trading on the resource.
4. Cryptocurrency pyramid based on the Ponzi scheme. Project participants on the referral side need to replenish their account by at least $ 500, after which they will be able to receive commissions for attracted people. In this case, commissions are paid up to level 21. It is unlikely that such a scheme can last long.
5. Lack of use cases. CloudToken does not have application scenarios in the real world, it can only be purchased from developers, and no token exchanges accept. The price of the token is not supported by anything, the demand for it is artificial. The company can change the value of the token at any time.
6. Lack of access to CTO wallet private keys. Users do not receive secret keys from the "wallet", instead they are given a password or PIN code.
7. The promise of high return on investment. Most projects that promise high investment returns actually turn out to be scams, unless the program has official registration and regulation.
8. Invalid information. The White Paper of the project mentions the names of people who have nothing to do with the project.
From the foregoing, we can conclude that CloudToken does not have a secure cryptocurrency wallet, its founders do not trade on the exchange and deceive investors. In addition, the project is advertised by well-known network scammers, and the CloudToken address is involved in the services of doubling bitcoins and the distribution of paid prohibited content.
Source: CryptoRussia.ru
FINMA PUBLISHES STABLE COIN GUIDELINES: EXPERT OPINION
Written by Manuylova Natalya
On September 11, 2019, the Swiss financial market supervision authority FINMA published an addendum to the ICO manual, which outlined its position on stablecoin1 under the Swiss supervision legislation. Observing the steady growth of stablecoin projects since 2018, in the context of a request from the Libra Association, FINMA in the initial directions provides information on how the Swiss supervisory will apply the relevant rules for the assessment and supervision of stablecoins.
According to FINMA, the supervisor considers stablecoin in accordance with the law on supervision of an existing approach to blockchain-based tokens: the main focus is on the economic nature and purpose of the token (“substance over form”). When making decisions on specific projects, FINMA will “follow the proven principle of“ same risks, same rules ”, and also take into account the features of each project.
The requirements under the supervision law may vary depending on which assets (e.g. currencies, goods, real estate or securities) are supported by stablecoin and how the legal rights of its owners will be protected (see the Overview in the Appendix to the Guidelines ICO, Appendix 2).
FINMA provided the legal assessment and indicative classification of the Libra project in accordance with Swiss supervisory law based on the available information. It is worth noting that FINMA focused on the fact that the classification may change during the implementation of the project.
Here are a few key points:
- The project falls under the regulation of Swiss financial market infrastructure. The project, as it is currently envisioned, will require a FINMA payment system license.
- The regulatory requirements for payment systems in Switzerland are based on prevailing international standards, in particular, on the Principles for Financial Market Infrastructures (PFMI). These requirements also apply to cyber risk management.
- The Swiss payment system is automatically covered by the Anti-Money Laundering Act. The highest international anti-money laundering standards must be ensured throughout the project’s ecosystem. Such an ecosystem must be protected from the increased risks of money laundering.
- According to the Financial Market Infrastructure Act (FMIA), all additional services that increase the risks of the payment system must comply with the relevant additional requirements. This means that all potential risks of the Swiss payment system, including banking risks, can be eliminated by introducing the relevant requirements in accordance with the principle of “same risks, same rules”. In connection with the release of Libra payment tokens, the services planned by the Libra project will clearly go beyond a purely payment system and, therefore, will be the subject of such additional requirements.
- These additional requirements will relate in particular to the distribution of capital (for credit, market and operational risks), concentration of risk and liquidity, as well as the management of the Libra reserve.
- Additional requirements will be based on generally accepted standards for similar activities in financial markets and should reflect the scope of the project. For example, for similar banking risks, banking regulatory requirements will apply. Thus, the license of the Swiss payment system will allow you to combine the strengths of banking and infrastructure regulation.
A prerequisite for obtaining a license as a payment system would be that the revenues and risks associated with the management of the reserve are fully covered by the Libra Association, and not by the providers of funds - stablecoin holders.
The planned international scope of the project requires an internationally coordinated approach. In particular, the definition of requirements for reserve management and management, as well as for combating money laundering, should be developed in the framework of international coordination.
Matters beyond supervisory law.
A possible licensing procedure under Swiss supervision legislation will only begin after FINMA receives a specific licensing application. In accordance with its practice, FINMA will not provide public information on the status of any existing licensing procedures and will not speculate on when it may be completed.
Other issues raised in the context of the Libra project, such as those related to tax law, competition law or data protection law, are outside the scope of supervisory law and therefore are not within the competence of FINMA.
In the next message, we will analyze in detail the documents posted below.
Source: FINMA.
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