The Swiss Financial Market Supervisory Authority (FINMA) informed the public about the new rules of the FinTech license that allow digital companies to open deposits for up to 100 million Swiss francs ($100 million). Moreover, not only credit and financial organizations but also crypto-startups will be licensed to conduct currency transactions. There is one requirement – not to impose interest on this money and not to reinvest.
The document has been planned to be one of the options for "softening the requirements" of the crypto-industry. It will be really easier to receive the updated FinTech license from 2019. To obtain the license, it is necessary to provide the regulator with documents detailing the business, its geography, and target audience; disclose information about the company's offices, its employees, shareholders, and management; financial plan of the project, asset storage method, risk management strategy, and anti-money laundering policy (AML).
By the way, Switzerland, in fact, was the first country in Europe to legitimize the turnover of virtual assets and was the first to formally regulate the activity of cryptocurrency funds. In October 2018, the Crypto Fund investment fund received a state license under No.1 for managing digital assets. Later, several other financial companies turned to the regulator for permission. However, now, any company may be engaged in attracting investments and managing cryptocurrency funds.
Thus, the new FinTech rules are now related not only to the digital economy but also to quite traditional industries, such as real estate. Cash deposits are widely used in investment contracts for the purchase of residential property under construction. In Germany, for example, such a financial service is called “building savings bank” and it works like this: the client places a certain amount of money on a public deposit (usually from 10-30% of the cost of housing); the real estate developer does not touch the holders’ money and can manage them only after commissioning of a facility. And information about the amount of money on the deposit is used to obtain the necessary loan in the bank. If a sufficient number of customers gather, and the investor receives all the necessary permits, the credit institution will issue the money to the developer without any problems. Then, after commissioning the house, the future tenants pay the remaining amount, which, together with the deposit goes to repay the bank debt. In practice, the apartment purchased in this way is 30% cheaper than the usual finished new building.
Similar schemes are applied throughout Europe. There are such schemes in Switzerland too but due to tight banking regulations, it is difficult for construction companies to open such deposits. In particular, credit institutions impose special requirements on the purity of funds deposited. In addition to the standard AML protocol, the account owner must comply with the internal requirements of each bank for the origin of money. Otherwise, not only the account owner but also the account holder, that is, the bank itself will have to stand trial.
Despite the fact that the confederation long ago adopted the program to encourage citizens to buy their own real estate, the problem with housing is acute: real estate in Switzerland is expensive, and only 35% of citizens own it. The remaining 65% have to rent apartments and houses, which is not cheap at all: with an average salary of about 6,000 Swiss francs ($6,000), the monthly housing fee ranges from 1,500 to 3,000 francs. A mortgage still costs more.
Simplified licensing application for a public deposit can lead to the emergence of new players in the Swiss construction market, such as existing crypto-funds that will be able to invest in construction. However, construction companies will also be able to open crypto-structures, for example, mini-funds to attract potential housing buyers. However, the state will reap profits too: every company will have to pay from 12 to 24% of taxes on net profit to the budget. Not counting the cantonal and municipal taxes.
Nevertheless, the Swiss authorities have taken a significant step towards the institutionalization of the digital market. The appearance of large investors on it and regulation are only special cases of institutionalization. The real irreversible process of adopting virtual currencies will begin only when new legal technologies emerge and integrate the digital financial sector into the real economy, directly affecting the lives of millions of people. That is what Switzerland actually did.