Bity, a nine-year-old Swiss Bitcoin ATM operator, is pushing back against the nation’s main markets regulator, the Financial Market Supervisory Authority (FINMA), arguing its Know-Your-Customer (KYC) rules are too onerous. Bity has begun a legal challenge against FINMA and is crowdfunding donations to help pay its legal bills, having raised almost 20,000 Swiss francs (about $23,000) so far toward its 25,000-franc goal.
The source of Bity’s anger is FINMA tightening KYC rules, requiring anyone using a Bitcoin ATM in Switzerland to do a KYC check – revealing their identity – if they transact more than 1,000 francs (about $1,150) over a 30-day period. According to Bity Chairman Alexis Roussel, this is being implemented in an undemocratic way. Bity’s complaint points to what it sees as a regulatory gray area, since FINMA-licensed entities do not include money transfer-type businesses, and it should be up to self-regulatory organizations (SROs) such as financial standards association VQF to define how members best implement anti-money laundering laws.
FINMA responded that money transfer firms are subject to monitoring due diligence obligations under the AMLA [Anti-Money-Laundering Act]. However, Roussel argued that FINMA changed the rules without doing any analysis and ignoring all the respondents of a consultation, who were uniformly opposed to the proposed change. He also pointed out that the Financial Action Task Force (FATF), which informs regulators about things like lowering transaction thresholds for identifying people in the financial system, is a non-democratic system that has no jurisdiction in Switzerland.
The crypto industry is stronger now and won’t be pushed around as easily as it has been in the past, Roussel said. FINMA was able to do this because they were never put in check.