- Sygnum agreed with the SBA that Swiss banks should be allowed to issue stablecoins using only their existing banking licenses.
The Swiss Bankers Association (SBA) has recently voiced its support for the proposed rule changes to stablecoin rules. Lawmakers in Switzerland are planning to integrate the amendments under the Financial Institutions Act (FinIA).
Sygnum Supports Relaxed Rules on Stablecoin Issuance
According to Stephen Zimmermann, General Counsel of Sygnum Bank, it’s an opportune time for Switzerland to “set clear, internationally aligned rules for stablecoins.” He believes allowing banks to issue stablecoins under their existing banking licenses would pave the way for strengthening legal certainty and reducing complexity.
Sygnum, the world’s first regulated digital asset bank, seconded the SBA’s proposal for regulators to no longer require banks to apply for a separate payment institution license in addition to their banking license to be able to issue stablecoins. It claimed the redundancy would only weaken competitiveness and put them at a disadvantage.
SBA argued there’s no reason to prevent banks from issuing stablecoins with their existing license, citing that even the European Union’s (EU) Markets in Crypto-Assets Regulation (MiCAR) does not impose such restrictions.
SBA Recommends a Stress Test on the Proposed Rules
On the other hand, the SBA recommended that advocates err on the side of caution to prevent possible shocks to the financial sector and economic instability. It urged them to conduct a comprehensive impact assessment of the potential risks of disintermediation, which could raise the cost of credit financing.
Moreover, the organization pushed for strictly defined consumer protection provisions in the amendment. It suggested prohibiting stablecoin-issuing banks from depositing their customers’ money to other payment instrument institutions. Likewise, it put forward a rule that would solely allow banks to place money in sight deposits with the Swiss National Bank (SNB).
The latter means only central bank money would serve as collateral for these digital assets. It would also prevent capital flight from the Swiss franc.
The Digital Money War
The latest developments come as the United States’ Clarity Act is deadlocked at the House Committee level in Congress. It mainly stemmed from the ongoing clash between banking and crypto institutions over yield-bearing stablecoins.
The White House has already tried to broker negotiations between the parties to get the ball rolling before March. Representatives from both sectors have yet to reach a compromise on the issue, but participants, particularly Ripple Chief Legal Officer Stuart Alderoty, described the last meeting as “productive.”
Meanwhile, the European Parliament is edging closer to the European Central Bank’s (ECB) proposed digital euro Central Bank Digital Currency (CBDC). A majority of the body agreed with the ECB that the CBDC would be the key to ensuring payment sovereignty in their jurisdiction.
On the other side of the globe, China jumped the gun on the digital yuan in January. However, the international community is adamant about totally embracing the CBDC despite its interest-bearing feature. Most concerns about it centered on its lack of transparency, privacy issues, and the Chinese government’s authoritarian control over the asset.
