Switzerland’s finance regulator has published new guidelines that indicate it will treat some tokens sold during initial coin offerings as securities.

In a press release published today, the Financial Market Supervisory Authority (FINMA) said there has been a sharp rise in the number of ICOs launching in Switzerland, resulting spike in inquiries about the regulations that apply to them.

With the situation currently “partly unclear,” the new guidelines have been released to clarify the status of projects wishing to launch a token sale project within the country.

“Creating transparency at this time is important given the dynamic market and the high level of demand,” the authority states.

Notably, FINMA will determine the applicability of regulation to crypto tokens on a case-by-case basis, taking a similar stance to that of the U.S. Securities and Exchange Commission in guidance released last July.

When assessing ICOs, FINMA said it will focus on the “economic function and purpose of the tokens,” with the “underlying purpose of the tokens and whether they are already tradeable or transferable” being primary factors in how they will be classified.

The agency outlined three categories of tokens – while acknowledging that hybrids are possible – and set out the likely regulatory stance for each as follows. These include “payment tokens,” “utility tokens” and “asset tokens,” the latter of which would land in the securities category.

“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,” the regulator said.

While conceding that blockchain technology has “innovative potential within and far beyond the financial markets,” FINMA CEO Mark Branson said in the release that ICO projects held “analogously to regulated activities cannot simply circumvent the tried and tested regulatory framework.”

The Swiss watchdog first said it was investigating initial coin offerings to determine whether they were following banking and securities laws in September 2017.

At the time it said it was examining “a number of ICO cases to determine whether regulatory provisions have been breached.”

Swiss flag image via Shutterstock