Switzerland has always been known for its banks and financial regulations. However, more and more blockchain companies are starting up their business in Switzerland using cryptocurrency as start-up capital. In fact, Switzerland is increasingly setting international standards for cryptocurrency and blockchain.
Switzerland is home to Zug, a small town turned blockchain hub which is often referred to as Crypto Valley named after California’s Silicon Valley tech hub. There are roughly 300 new cryptocurrencies opening in Zug each year. ShapeShift exchange and the Ethereum Foundation, two big cryptocurrency companies are both headquartered in Zug along with many other tech companies.
But now Switzerland and Swiss authorities are going one step further and are discussing whether they should create an online environment to test new blockchain-based applications and cryptocurrency technology. This is called a “Sandbox” because companies can test and try out new ideas and technology before they are released into the marketplace. By creating a Sandbox, authorities are hoping to attract more talent and more investment.
Over the past months Swiss groups have examined whether and to what extent amendments to the current legislative instruments are appropriate due to the development of blockchain technology.
The groups have identified a need for action in the civil law for transfer of tokens, their treatment under insolvency law and the creation of new opportunities in the area of financial market infrastructures.
For example, a new Swiss based start-up named Alprockz is now working on a coin based on the Swiss franc, highlighting to an extent that crypto-technology is progressing with or without the support of the banks. There is also Giracoin, which is launched a new cryptocurrency on the market and is accessible to anybody in the world through an innovative mining process.
As these cryptocurrency companies seeks to expand globally, Switzerland’s central location, blockchain-friendly political and regulatory sentiment and growing blockchain business cluster is the perfect springboard from which to develop markets around the world.
However, Switzerland must compete with countries like Liechtenstein, Gilbraltar and the Cayman Islands were the regulations are more relaxed. While crypto-related business in Switzerland is tiny compared with its traditional banking sector, it has grown rapidly and employs hundreds of people, according to local officials. Supporters also consider it a key innovation for the future of global finance. Regulators constantly have to battle to keep the doors open on these companies while ensuring cryptocurrency companies are not breaking the law.
Swiss banks are urging the authorities to give them more clarity on the rules that apply to cryptocurrency projects before providing services to the market. Only a few of Switzerland’s 250 banks allow companies to transfer cryptocurrencies into cash, making it difficult for funds to be transferred and for cryptocurrency to be used practically.
For now, Switzerland is considered a crypto-friendly country but it’s a constant battle between banks, investors and regulators. It’s tough to say what the future holds.
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