“Our balanced approach to handling ICO projects and inquiries allows legitimate innovators to navigate the regulatory landscape and to launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.”

Like most regulators, each ICO will be examined on its individual merits. In other words, the regulator will look at the economic function and purpose of each individual offering to determine what laws apply. Still, FINMA recognizes the emerging distinction between different kinds of tokens:

Payment tokens

In this case referring as well to cryptocurrencies.

Utility token

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

Asset token

Tokens which 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. This distinction is very similar to the terminology that has been emerging in the industry. The distinction will help founders in determining whether an ICO is subject to securities legislations, anti-money laundering (AML) and know-your customer (KYC) requirements. To make matters slightly more confusing, FINMA states that the individual token classifications are not mutually exclusive. Asset and utility tokens can also be classified as payment tokens (referred to as hybrid tokens). In these cases, the requirements are cumulative; in other words, the tokens are deemed to be both securities and means of payment.