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FintechNGR speaks on Switzerland, US regulatory frameworks on Cryptocurrency

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The Fintech Association of Nigeria (FintechNGR) has highlighted a few jurisdictions that are especially known for their notable, thoughtful, innovative approaches to creating regulatory frameworks for cryptocurrency.

FintechNGR disclosed this while calling on the Central Bank of Nigeria (CBN) as well as major stakeholders in the cryptocurrency industry to look at the United States and Switzerland’s innovative regulatory frameworks on  the cryptocurrency.

Recall that CBN had previously banned all forms of cryptocurrencies in the country, warning deposit money banks, non-financial institutions, and other financial institutions against their continuity in the business.

The association, however, proposed a regulatory framework for cryptocurrencies by the central bank, asking the CBN to emulate Switzerland.

According to the FintechNGR, “When compared to its European neighbors, Switzerland has taken a pragmatic approach to regulating digital assets and blockchain.

“Switzerland is also unique in that its approach has been driven almost exclusively by its financial regulator, the Financial Market Supervisory Authority (FINMA).

“This began in 2014, when FINMA issued a fact sheet stating that purchase and sale of bitcoins on a commercial basis and the operation of trading platforms for digital assets were subject to the country’s AML law. Since then, FINMA has issued regulatory guidance on fintech licenses.

“However, there are indications that the legislature could get involved, as the Federal Council released a report in December 2018 on the legal framework for blockchain in the financial sector; this report identified problem spots, and the Federal Council in March 2019 published a draft law to address these relatively minor issues.

“Most recently, Switzerland passed the Blockchain Act, a law intended to create more legal certainty and fewer obstacles for blockchain applications while also minimizing abuse; is expected to come into force February 2021.

“The law covers the exchange of digital securities and sets standards for exchanges, establishing a “firm legal basis for exchanging digital-only securities and reclaiming digital assets from bankrupt countries.

“Switzerland’s regulations and existing financial infrastructure have made it a top destination for innovative firms. Switzerland is also home to Zug, also known as “Crypto Valley,” which has been open to digital assets and blockchain since 2014. With a low corporate tax rate and loose regulations on digital assets, it has been successful in attracting blockchain companies.”

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FintechNGR, in its regulatory framework proposal for cryptocurrencies, also spoke about United States’ checks and balances on the blockchain operation in the country.

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The association said: “United States’ web of federal and state laws and regulations has led to a complicated regulatory landscape for digital assets.

“This is perhaps most evident in the differing rulings of state regulators on whether certain digital asset businesses need to obtain a money transmitter license, as well as differing definitions of blockchain, distributed ledger technology, virtual currency, digital assets, and more. 

“In 2015, New York established the BitLicense regulation, which requires virtual currency businesses to apply for a license from the Department of Financial Services (DFS).

“Since then, states like Vermont and Wyoming have taken more open approaches to virtual currency and blockchain, with Vermont passing a law to create Blockchain- Based Limited Liability Companies.

“Also, the Office of the Comptroller of the Currency announced earlier in January that Federally regulated banks can make use of stablecoins to conduct payments and other activities.

“At the federal level, the Securities and Exchange Commission (SEC) has regulatory authority over securities and has taken the position that certain tokens should be deemed securities, while the Commodity Futures Trading Commission (CFTC) has authority over tokens deemed to be commodities, which includes bitcoin and ether.”

 

 

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