Swiss Regulator Launches Investigation into Unauthorized ICO

While Switzerland is actively trying to become a hub for blockchain-based businesses, the country has set up a clear set of laws that crypto start-ups need to follow to avoid enforcement actions.

With this in mind, recent reports indicate that the Swiss Financial Market Supervisory Authority (FINMA) has begun investigating Envion AG, a crypto mining company. The mining start-up uses clean energy and decentralized protocols to power mobile mining hardware.

The firm has reportedly carried out an unauthorized token sale, in the form of an Initial Coin Offering. It is believed that the FINMA considers Envion’s token sale to have been carried out via a method similar to that of accepting bonds.

According to the FINMA investigation, it has been determined that Envion AG received approximately $100 million from roughly 30,000 investors in exchange for EVN tokens. As the token sale was unauthorized, the regulator has stated that the investigation is focusing on: “possible breaches of banking law resulting from the potentially unauthorized acceptance of public deposits”.

It is important to point out the fact that Switzerland has one of the world’s most favourable regulatory frameworks for blockchain and cryptocurrency companies. For instance, the FINMA has published two guidance papers for domestic ICOs, with the first released in September 2017, and the latter in February 2018. While the framework states that token sales are regulated on a case-by-case basis, it does mention that ICO sales require start-ups to get a banking license, needed for legally accepting public deposits.

So far, the FINMA has refused to issue any additional comments on the case before the investigation is concluded, and action is taken.

Research has shown that at this time, Switzerland is the world’s second friendliest countries for cryptocurrency start-ups and ICOs. The top spot is currently held by the U.S., while Singapore holds the third position.

Based on everything that has been outlined so far, while Switzerland offers crypto-friendly regulation, it is important for companies operating in the space to thoroughly respect domestic regulatory frameworks.