- Switzerland is making KYC obligatory for all stablecoin holders, sparking backlash within the crypto group.
- Critics have questioned the impression the brand new legislation can have on P2P transactions and person privateness.
- FINMA justifies its stringent KYC necessities by citing cash laundering and sanctions dangers.
Switzerland's new stablecoin regulation, which requires know-your-customer (KYC) verification for all holders, has drawn harsh criticism throughout the crypto group. Ripple CTO David Schwartz denounced the legislation as a “know your buyer” regulation, highlighting the strict necessities for monetary intermediaries concerned in stablecoin transactions.
Actually there isn’t a regulation that claims “know your buyer's buyer.”
— David “Joel Katz” Schwartz (@JoelKatz) August 2, 2024
The Swiss Monetary Market Supervisory Authority (FINMA) not too long ago issued new laws requiring the id of all stablecoin holders to be “appropriately verified by the issuing establishment.” FINMA considers stablecoin issuers to be monetary intermediaries topic to anti-money laundering (AML) legal guidelines, and due to this fact requires KYC checks on stablecoin holders.
Notably, the brand new legislation additional requires stablecoin issuers to confirm the id of the helpful stablecoin holder if doubts come up concerning the id of the events throughout a enterprise transaction. The legislation requires stablecoin issuers to reconfirm the id of the holder in such circumstances or repeat the verification course of.
FINMA famous that the brand new laws had been needed because of the rising dangers of cash laundering, terrorist financing and sanctions evasion within the area. The regulator highlighted these points as components that result in a reputational threat for Switzerland as a monetary middle.
Nevertheless, some members of the crypto group have questioned the necessity for the brand new legislation, analyzing its potential impression on using stablecoins, particularly in P2P transactions. In response, X customers identified that scrutinizing stablecoin holders all through all the transaction course of might critically hinder using P2P transactions.
One person famous that EU laws are extra versatile, solely requiring KYC verification on the stablecoin issuance and redemption phases, whereas one other highlighted the comparatively small measurement of the Swiss stablecoin market in comparison with rising markets similar to Turkey and Thailand, the place stablecoin utilization is turning into mainstream.
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