The Swiss Blockchain Federation has published regulatory guidelines for token issuers.
This is version 1.0 of the document entitled “Guidelines for Issuers of Equity and Related Tokens” and was published today after being approved in mid-November by the Board of the Swiss Blockchain Federation itself.
The Swiss Blockchain Federation is a private organisation, so the recommendations in this document are not intended to replace personalised advice, albeit the organisation claims that they are economically and legally valid.
The document is, therefore, a relatively easy to understand and concise manual that aims to help small and medium-sized enterprises to harness the potential of the issuance and trading of tokens.
The manual distinguishes between Equity Tokens and Debt Tokens, whereas it does not deal with simple utility tokens and focuses on the issuance of shares and other financial instruments in the form of digital tokens.
In theory, following the guidelines proposed by the Swiss Blockchain Federation, even small issuers could digitise shares, participation certificates or bonds in full compliance with regulatory requirements.
The choice to tokenise these assets makes them digitally transferable in seconds, with the aim of allowing the development of secondary markets for all those shares that are currently not publicly exchangeable.
Moreover, it has been chosen to focus the manual on this type of financial asset because, unlike other types of tokens, they provide investors with an already well-established regulatory framework of rights.
The handbook provides guidance on both public token offerings and governance, as well as token trading markets. In fact, the Swiss Blockchain Federation is convinced that the capital markets of the future will be made digital, and so it aims to allow as many realities as possible to take part in them.
The federation argues that Switzerland is already very well positioned in this specific sector so that it can play a leading role in this area.
It argues that the issuance of equity and similar instruments in the form of digital tokens is one of the most important and promising cases of use of blockchain and other DLTs, as these enable the easy and rapid issuance of instruments that represent capital in full compliance with Swiss law.
Regulatory guidelines for tokens issued in Switzerland
One of the recommendations of the manual is to make one’s business as transparent as possible by publishing the open-source code of the smart contracts that regulate it and, if not all of them, at least the most important ones.
Another advice is to make the administration decentralised, which means to have non-custodial wallets or exchanges and therefore to not hold the private keys of the users.
It is also important to identify users with KYC in order to avoid money laundering and therefore comply with Swiss rules.