Recent changes in Swiss stablecoin regulations, which now require Know Your Customer (KYC) checks for all stablecoin holders, have sparked significant backlash within the crypto community.
David Schwartz, CTO of Ripple, criticized the new regulations as an overly stringent “know your customers’ customers” policy, highlighting the burdens placed on financial intermediaries involved in stablecoin transactions.
The Swiss Financial Market Supervisory Authority (FINMA) has introduced this regulation, requiring stablecoin issuers to verify the identities of all holders. This new rule treats stablecoin issuers as financial intermediaries, subject to anti-money laundering (AML) standards, and mandates that any uncertainties about a party’s identity in transactions must lead to re-verification or additional checks.
FINMA implemented these regulations due to concerns about increased risks of money laundering, terrorist financing, and evasion of sanctions, which could harm the reputation of the Swiss financial system.
Critics within the crypto space argue that the law may negatively impact stablecoin use, particularly in peer-to-peer (P2P) transactions. Some have pointed out that, unlike the more lenient EU regulations that only require KYC checks at issuance and redemption, the Swiss approach could hinder P2P transactions.
Additionally, there are concerns about the relatively minor scale of the Swiss stablecoin market compared to more active markets like Turkey and Thailand.
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