From the first token sales to FINMA's taxonomy

The token wave of 2016 to 2018

Switzerland entered the market for Kryptowerte und Digital Assets through foundations in the Canton of Zug. The Ethereum Foundation (Stiftung Ethereum), a Swiss foundation established in 2014 by founders who had gathered in Zug, financed the development of the Ethereum network by selling ether against bitcoin, and its model of a Swiss foundation issuing tokens to fund an open-source protocol was copied many times in the following years. In July 2017 the Tezos Foundation, established in Zug in April of that year, raised the equivalent of about USD 232 million in bitcoin and ether. Similar sales followed from Zug, Zurich, Geneva and, on a smaller scale, from Lugano and the rest of Ticino.¹ The term "initial coin offering" (ICO) borrowed the language of the initial public offering, although the tokens sold usually conferred no shareholder rights at all. Many projects described their tokens as mere access rights to a future network, which the issuers hoped would keep them outside financial market law.

The legal questions arose at once. A foundation that accepted bitcoin and ether from thousands of buyers might be accepting public deposits within the meaning of the Banking Act. If it promised returns, it might be issuing securities or operating a collective investment scheme. Where it exchanged one token for another or held tokens for its buyers, it could be a financial intermediary under the Anti-Money Laundering Act. FINMA reacted in two steps. On 19 September 2017 it closed down three providers of a fake cryptocurrency called "E-Coin", which had accepted at least CHF 4 million from several hundred users and kept virtual accounts for them without a banking licence, and it placed the three entities in bankruptcy liquidation.² Ten days later, on 29 September 2017, it published Guidance 04/2017 on the regulatory treatment of initial coin offerings, which announced that it was investigating a number of ICOs for possible breaches of supervisory law and warned investors of the risks.³ These two steps defined the regulator's line: the technology was welcome, but token issuers would be measured against the existing rules.

The guidelines of 16 February 2018

On 16 February 2018 FINMA published its guidelines for enquiries regarding the regulatory framework for initial coin offerings. The document classified tokens according to their economic function and their transferability into three categories. Payment tokens, which FINMA equated with cryptocurrencies, are intended to be used now or in the future as a means of payment for goods or services or as a means of transferring money or value, and they give rise to no claims against an issuer. Utility tokens are intended to provide digital access to an application or service by means of a blockchain-based infrastructure. Asset tokens represent assets such as a debt or equity claim on the issuer, a share in future earnings or capital flows, or physical assets that can be traded on the blockchain. FINMA expressly recognized that hybrid forms were possible, so that a single token could combine the features of more than one category.⁴

The classification determined the applicable law. FINMA announced that it would apply the anti-money laundering rules to ICOs of payment tokens, because the issue of such tokens constituted the issuing of a means of payment. It would treat asset tokens as securities whenever they were standardized and suitable for mass trading, with the consequences that securities law attached to that qualification. Utility tokens would not be treated as securities if their sole purpose was to confer digital access rights to an application or service and if the utility token could actually be used in this way at the time of issue. If a utility token also or only had an investment purpose, FINMA would treat it like an asset token.⁵ Banking law and the law on collective investment schemes would apply in the exceptional case where an issuer accepted funds with a repayment obligation or managed the funds raised on behalf of investors.

Notes

Wikipedia (used as a last resort), "Ethereum", https://en.wikipedia.org/wiki/Ethereum (Ethereum Foundation, Stiftung Ethereum, a Swiss non-profit foundation established in 2014; crowd sale of July to August 2014 in which participants "bought ... ether with ... bitcoin"); "Ethereum Foundation", https://en.wikipedia.org/wiki/Ethereum_Foundation (founders' meeting in Zug in 2014); "Tezos", https://en.wikipedia.org/wiki/Tezos (Tezos Foundation established in Zug on 17 April 2017; on 1 July 2017 it "raised $232 million in Bitcoin and Ethereum"). ↩
FINMA, media release "FINMA closes down coin providers and issues warning about fake cryptocurrencies", 19 September 2017, https://www.finma.ch/en/news/2017/09/20170919-mm-coin-anbieter/ (QUID PRO QUO Association, DIGITAL TRADING AG and Marcelco Group AG; "funds amounting to at least four million Swiss francs from several hundred users"; virtual accounts without a banking licence; bankruptcy liquidation). The ICO release of 29 September 2017 (below) refers to this release as published "a few days ago". ↩
FINMA, Guidance 04/2017, "Regulatory treatment of initial coin offerings", 29 September 2017, https://www.finma.ch/~/media/finma/dokumente/dokumentencenter/myfinma/ 4dokumentation/finma-aufsichtsmitteilungen/20170929-finma-aufsichtsmitteilung-04-2017.pdf; FINMA, media release "FINMA is investigating ICO procedures", 29 September 2017, https://www.finma.ch/en/news/2017/09/20170929-mm-ico/ (examination of a number of ICO cases; possible application of anti-money laundering, banking, securities trading and collective investment scheme law). ↩
FINMA, media release "FINMA publishes ICO guidelines", 16 February 2018, https://www.finma.ch/en/news/2018/02/20180216-mm-ico-wegleitung/ (payment tokens, utility tokens and asset tokens; hybrid forms possible); FINMA, "Guidelines for enquiries regarding the regulatory framework for initial coin offerings (ICOs)", 16 February 2018, https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/ 1bewilligung/fintech/wegleitung-ico.pdf, section 3.1 (definitions of the three categories; "Asset and utility tokens can also be classified as payment tokens (referred to as hybrid tokens)"). ↩
FINMA, media release of 16 February 2018 (above) (AMLA for payment ICOs; securities regulation for asset tokens and for utility tokens with an investment function; FINMA: "blockchain-based projects conducted analogously to regulated activities cannot simply circumvent the tried and tested regulatory framework"). FINMA, ICO guidelines (above), section 3.2.2 (utility tokens not treated as securities "if their sole purpose is to confer digital access rights to an application or service and if the utility token can actually be used in this way at the point of issue") and section 3.2.3 (asset tokens as securities if "standardised and suitable for mass standardised trading"). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.

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From the first token sales to FINMA's taxonomy

The token wave of 2016 to 2018

The guidelines of 16 February 2018

Notes

Setting up or expanding in Switzerland?