Swiss Regulator Affirms Bitcoin and Cryptocurrencies Should Be Treated As Very Risky Assets
Recently, the Swiss financial regulator, the Swiss Financial Market Supervisory Authority (FINMA) has affirmed that crypto assets should be treated as risky assets with a 800% risk weight. The letter was dated to October 15.
FINMA has issued a confidential letter, which was reported by Swiss Info, a local news media outlet, that stated that financial institutions should think very well before they actually started to invest in cryptocurrencies.
The authority advises banks and financial dealers to consider these assets to be super risky and that you might lose most of your money while using them (but you may also get a lot of money, on the other hand, as the volatility is very high).
FINMA guides the banks not to set aside more than 4% of their capital to invest in cryptos and it has affirmed that any banks in the country will need to inform the institution if they actually spend more of this amount of money in it. However, the letter does not release official rules of how Swiss banks should deal with cryptos.
The main recommendation of the FINMA is that the companies should not let the impact of the crypto assets that they acquire become too high. They should invest only some “spare money” in it made sure that cryptos are a limited aspect of their business model if they want to be protected from the volatility and the dangers of the market as well.
Part of the reason why the authority has decided to make this official announcement was that many banks from the country, as well as security dealers, had already asked it about crypto assets and the company had to take some position on the issue.
Swiss has a very solid banking sector so it is considered normal for the authority to take a proactive role in order to regulate the market to ensure that it is running well.
Back in February, the Swiss authority has affirmed that Initial Coin Offerings (ICOs) in the country would be determined on a case by case basis as they would take a stance that would be similar the U. S. Securities and Exchange Commission (SEC) in reviewing these assets and to decide whether they would be utility tokens or securities.