In an attempt to regain its cryptocurrency crown, Switzerland is planning to ease crypto regulation, as regulators step up efforts to prevent the migration of cryptocurrency projects from the country.
The exodus of digital currency projects is resulting in Switzerland losing business to the likes of Gibraltar, the Cayman Islands, and Liechtenstein.
The ‘Crypto Nation’ wants its title back
Switzerland was once known as the ‘Crypto Nation’, a title that has been slowly waning after a tighter regulatory framework was introduced in February 2018. Data released by PwC showed the Swiss had dropped from second place to sixth in the amount of Initial Coin Offering (ICO) funds countries raise, prompting the Swiss to make a regulatory U-turn by encouraging banks to accept the accounts of cryptocurrency organizations.
Supporters of virtual currency in Switzerland consider the market to be central to the future of global finance.
Banks need greater access to crypto entities
The wealthy canton of Zug in central Switzerland is hailed as ‘Crypto Valley’, with around 300 cryptocurrency ventures opening in the town in recent years. Though without access to the banking system, many of the crypto entities are struggling to function in Zug and threaten to leave if the government fails to provide them with the access they need.
As Heinz Taennler, Zug’s finance director says:
“All their banking relationships are going to Liechtenstein. These are hundreds of jobs that have been created, and every job is important.”
Switzerland’s financial market supervisor, FINMA, is in talks with the Swiss National Bank (SNB) about the steps needed to be taken to ease crypto regulation and ensure banks are more accessible to cryptocurrency ventures.
As Thomas Moser, of the SNB, told Reuters:
“We would not want to close the door on the opportunities that such innovation (cryptocurrencies) might bring.”
Despite moves to regulate the market by introducing more stringent regulatory frameworks this year, crypto startups have still been attracted to Switzerland, cementing themselves in ‘Crypto Valley’.
For example, in May this year, the blockchain venture ConsenSys announced a partnership with the Crypto Valley Association (CVA), the government-supported association, which has been a leading force in Switzerland’s growing blockchain market.
At the same time, Bitfinex, the fifth largest cryptocurrency exchange, said it was planning on moving offices from Hong Kong to Switzerland.