Is my ICO a security or not? That is the question. Obviously not a line from a Shakespearean tragedy but it could become a tragedy if you get it wrong. 

Here are some guidelines before you leap into the void. 

"Each case must be decided on its individual merits
Financial market law and regulation are not applicable to all ICOs. Depending on the manner in which ICOs are designed, they may not in all cases be subject to regulatory requirements. Circumstances must be considered on a case-by-case basis. As set out in FINMA Guidance 04/2017, there are several areas in which ICOs are potentially impacted by financial market regulation. At present, there is no ICO-specific regulation, nor is there relevant case law or consistent legal doctrine.

FINMA's principles focus on the function and transferability of tokens
In assessing ICOs, FINMA will focus on the economic function and purpose of the tokens (i.e. the blockchain-based units) issued by the ICO organiser. The key factors are the underlying purpose of the tokens and whether they are already tradeable or transferable. At present, there is no generally recognised terminology for the classification of tokens either in Switzerland or internationally. FINMA categorises tokens into three types, but hybrid forms are possible:

Payment tokens are synonymous with cryptocurrencies and have no further functions or links to other development projects. Tokens may in some cases only develop the necessary functionality and become accepted as a means of payment over a period of time.

Utility tokens are tokens which are intended to provide digital access to an application or service.

Asset tokens represent assets such as participations in real physical underlyings, companies, or earnings streams, or an entitlement to dividends or interest payments. In terms of their economic function, the tokens are analogous to equities, bonds or derivatives.

Focus on anti-money laundering and securities regulation
FINMA's analysis indicates that money laundering and securities regulation are the most relevant to ICOs. Projects which would fall under the Banking Act (governing deposit-taking) or the Collective Investment Schemes Act (governing investment fund products) are not typical.

The Anti-Money Laundering Act contains requirements for financial intermediaries including, for example, the need to establish the identity of beneficial owners. The law aims to protect the financial system against the risks of money laundering and the financing of terrorism. Money laundering risks are especially high in a decentralised blockchain-based system, in which assets can be transferred anonymously and without any regulated intermediaries.

Securities regulation is intended to ensure that market participants can base their decisions about investments on a reliable minimum set of information. Moreover, trading should be fair, reliable and offer efficient price formation.

On the basis of the above-mentioned criteria (function and transferability), FINMA will handle ICO enquiries as follows (see also the diagram in the Guidelines, page 8):
Payment ICOs: For ICOs where the token is intended to function as a means of payment and can already be transferred, FINMA will require compliance with anti-money laundering regulations. FINMA will not, however, treat such tokens as securities.
Utility ICOs: These tokens do not qualify as securities only if their sole purpose is to confer digital access rights to an application or service and if the utility token can already be used in this way at the point of issue. If a utility token functions solely or partially as an investment in economic terms, FINMA will treat such tokens as securities (i.e. in the same way as asset tokens).

Asset ICOs: FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements under the Swiss Code of Obligations (e.g. prospectus requirements).

ICOs can also exist in hybrid forms of the above categories. For example, anti-money laundering regulation would apply to utility tokens that can also be widely used as a means of payment or are intended to be used as such."

Swiss regulations link:


Appendix: Minimum information requirements for ICO enquiries
General information
Name of the project
Company name / names of the project operators including domicile of the company/companies, address(es), email address(es) and website(s)
Details of all persons involved ( incl. addresses and/or domicile of the company), in particular:
 founder
 token issuer
 token seller
other secondary trading participants (platform, ICO organisers, etc.)
Have the above-named persons been granted licences under financial market law in other countries? If yes, please provide the relevant details.
Project description
Project name, goals and project plan

Key features of the service to be developed

Which market participants (investors) does the ICO target?

Are there any restrictions regarding investors?
Information about the project organisation and project
planning (timing of the various ICO phases, milestones, etc.)
Information about the technologies to be used (distributed ledger technology used; are new or existing technologies used; is this an open source project; etc.)

With which cryptocurrencies (or legal tender) will the ICO be financed and how?

How much money (in CHF) is the ICO intended to raise?

Have the funds already been allocated to a specific project? How will surplus funds be handled?

Token issue
Will a token be created in the course of the ICO?
If yes: In which steps will the token be created (technical standards, e.g. ERC20, technology used, etc.)?
At which point, by whom and in which manner will the token be transferred to the investors?
Which functionalities are planned for the token? (detailed description)
At which point will the functionalities planned apply?
Which rights does the investor acquire? How are they documented (please provide and refer to specific participation and issuing conditions).
Will a financial intermediary who is subject to AMLA in Switzerland be commissioned to meet the due diligence requirements under AMLA?

If yes: please provide detailed information about the
relevant processes and the financial intermediary in question

Transfer and secondary market

How can the token be transferred (please provide information about compatible wallets, technical standards)?
Is the token already functional at the time of transfer? If yes, to what extent?
How and where can the token be acquired or sold after the issue (are there any secondary market platforms)?
Will it be possible to use the tokens to buy goods or services or make payments to third parties?

Are there plans for the project operator / issuer to buy back tokens?