Reasons Why Crypto Is Successful In Switzerland
Nowadays, the cryptocurrency market largely depends on the attitude of governments. In Switzerland, coins are considered as a means of payment, and this fact demonstrates great prospects. The reason why Swiss authorities are loyal to cryptocurrencies is the country’s historical background. For centuries, Swiss banks have been considered the most reliable place to store wealth, including assets of foreign residents. The key role here was played by the reputation of Switzerland. The country can boast about the stable economy and the general openness to innovations.
Swiss discussion of the law on cryptocurrency
Johann Niklaus Schneider-Ammann, a former Swiss president and current finance minister, said that Switzerland wanted “to be the crypto nation”. At the conference in St. Moritz in January 2018, he pointed out that blockchain is a technological embodiment of the concept of Switzerland as an independent, free and safe country.
Johann Niklaus Schneider-Ammann
The statements of the Swiss Minister of Finance found a positive response among other members of the Federal Council. Now we can say that the positive discussion of the law on cryptocurrency by Swiss authorities is the official policy of the government. Perhaps, in a few years, Switzerland will be recognized as the leading cryptocurrency country. Until then, a small Swiss town called Zug gets all the credit.
Zug as the Swiss crypto capital
Crypto Valley — that's what they call the picturesque town of Zug that is in 25 minutes drive from Zurich. In early 2017, the government-backed organization the Crypto Valley Association was established here, so a huge amount of ICOs today is based in this region and all of them have very favorable conditions for business. Examples:
- Monetas, a blockchain-based project created by Johann Gevers, who came to Zug in 2012 to promote the idea of creating the cryptocurrency ecosystem.
- Ethereum. The Ethereum Foundation is located in Zug since it was founded in June 2014. This organization greatly contributed to the town popularization among crypto enthusiasts.
- Bancor is a platform for exchanging of ERC20-based tokens and one of the most successful ICO companies in 2017.
- Status, a mobile OS, created on the basis of the Ethereum platform, and a Blockchain Oscar 2017 People's Choice winner.
- Tezos Foundation managed to raise a record amount of investments in 2017 ($232 million). However, the project was called a scam after facing lawsuits as its product was not released to the public.
ICO rating in Switzerland
According to the international audit agency PwC, 6 out of 15 largest ICOs are registered in Switzerland. In 2017, Switzerland was placed second by the amount of investments in ICO. It gained $1.46 billion, while the US managed to get $1.72 billion. What about Swiss-based ICO today, in 2018, they are also in a good state. The independent rating agency ICORating reported that Switzerland got to the top European countries by the number of ICO. The data for the I quarter of 2018 is given below.
As far as you can see, in the beginning of the year, 16 projects were registered in Switzerland and 5 of them are actually based there. This is a clear answer for the question of how cryptocurrencies are regulated in Switzerland. The country’s government is equally loyal to both foreign residents and local businessmen.
While governments of other countries express concern about the total obsession with cryptocurrencies, Switzerland creates conditions for attracting new investors. According to Johann Gevers, Switzerland is the most decentralized country in the world as its officials do not consider blockchain as a dangerous technology undermining their authority. In particular, the government of Zug allowed people using Bitcoin ATMs to quickly purchase cryptocurrency and use digital coins to pay for goods and services in regular stores.
ICO regulation in Switzerland
Now it’s time to tell in detail how cryptocurrencies are regulated in Switzerland. Before 2018, there was no clear definition of what exactly ICO tokens are. Each project was considered on a case by case basis. In early 2018, the Swiss regulator FINMA issued a document containing recommendations to consider tokens as assets. The release of this document was due to the large number of applications for registration from ICO projects.
According to the document, there are three types of ICO tokens:
- Payment tokens are not considered securities, but they are to be sold in accordance with the AML rules.
- Utility tokens are not securities either, unless otherwise stated. The tokens give rights for products or services.
- Asset tokens are considered shares and should be distributed only in accordance with the Securities Act.
In order to purchase useful tokens, buyers don't need to verify their identity because this type of tokens is not subject to AMLA rules by the FINMA classification. The major part of tokens on the ICO market are utility ones, and it gives a green light to many projects. Of course, this doesn't negate the fact that FINMA checks ICO-projects suspected in the law violation in accordance with the anti-money laundering policy.
The document issued by FINMA demonstrates that Switzerland is not going to tighten conditions for cryptocurrency companies. The paper reflects the soft ICO regulation and confirms that the Swiss government is loyal to the crypto sphere. Although, it costs a lot for businessmen. The registration of a company in Switzerland is an expensive and complicated process.
The crypto industry is only at the beginning of its development. However, Switzerland does not waste its time and use all given opportunities to attract capital to the country. While China and South Korea are pursuing the prohibition policy, the Swiss government tries to carry out a soft regulation — and it has already borne fruit. Of course, the tightening of the regulatory policy is still possible. But today Switzerland is the country where a solid foundation for the cryptocurrency ecosystem is being laid, and this will open up huge opportunities in the future.
Alina Vorobiova, Blockspoint