Despite the clarity of the SBA’s position, many questions remain to be answered on the legal front.
In a recently published article White paperthe Swiss Bankers Association (SBA) proposed the issuance of a joint deposit token on a public blockchain.
The SBA noted the consensus for registered institutions to issue stablecoins and cited a push to regulate stablecoins by the FSB, OECD and BCBS. This will allow for optimal monitoring and protection of investors. Once again, he affirmed the widespread adoption of digital currencies, including stablecoins, the collapse of the crypto market, and the need for more reliable and reliable assets.
Accordingly, the SBA suggests three possible approaches to handle the situation. In one case, individual banks can issue their tokens with their rules. Otherwise, they propose that banks launch their tokens separately but follow standardized regulation and are fully backed by cash reserves. The third approach, favored by the SBA, is the joint deposit token approach.
Different type of stablecoin
According to the whitepaper, a joint deposit token is a programmable money based on the public blockchain network and smart contract features. Such a token would enable new use cases, reduce risks, increase transactional efficiency, and open up new business frontiers. This, he believes, will support the Swiss franc and strengthen Switzerland’s position as a top innovation center.
As it stands, there are already two CHF-denominated stablecoins issued by SIX Digital Exchange and Sygnum. However, both assets can only be used in their private ecosystems. The SBA believes that a joint deposit token will allow for interoperability and ensure more security. Similarly, the token could earn interest like a conventional bank deposit if held in a bank wallet.
Joint Deposit Token Legality
Despite the clarity of the SBA’s position, many questions remain to be answered on the legal front. Since the SBA proposes the token as a ledger-based security, regulators may want to treat it as a security. Unfortunately, doing so could nullify its economic and technological potential. Accordingly, there is a need to clarify the FINMA or legislature’s position on the proposed asset.
Also, the SBA has to deal with the hurdle placed by FINMA on regulated institutions seeking to issue stablecoins. The agency considers that some of the requirements are restrictive and hopes to be able to agree on an alternative solution.
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