A crypto exodus of sorts is currently taking place in Switzerland, with the Swiss National Bank being held accountable as digital currency business is being lost to offshore rivals such as Liechtenstein, Gibraltar, and the Cayman Islands.
A key part of the future of finance
Two companies operating in the Swiss virtual currency industry recently closed their doors, which has led to industry insiders becoming worried that ground is being lost and that this could be the beginning of a trend.
As things stand the crypto industry in Switzerland is still modest when compared with the traditional banking sector, but many see it as a key part of the future of global finance.
Zug, a wealthy Swiss canton has been nicknamed “crypto valley” by many, with somewhere in the region of 200-300 virtual currency startups operating there in recent times.
Heinz Taennler, Zug’s finance director, expressed concerns that these companies may eventually leave for destinations where banks are more welcoming.
Speaking to Reuters, Taennler commented that “all their banking relationships are going to Liechtenstein.”
“These are hundreds of jobs that have been created, and every job is important.”
Issues opening bank accounts
Sweetbridge Foundation is a blockchain startup headed by David Henderson, who was interested in launching an ICO in Switzerland, but found himself running into roadblocks during the process –
“A cautionary response from Swiss banks resulted in a pause or closure for most projects in the cryptocurrency space.”
Henderson eventually canceled his ICO in Switzerland and instead chose to set up bank accounts in Liechtenstein.
Thomas Moser, a member of the governing board of the Swiss National Bank, said that some cryptocurrency companies had experienced issues opening bank accounts.
“They raised concerns about problems with opening bank accounts, which was a worry for them, and asked for help,” Moser told Reuters.
“I said this was not something the SNB dealt with, but they should speak with FINMA.”
“We would not want to close the door on the opportunities that such innovation (cryptocurrencies) might bring,” concluded Moser.
Potential money-laundering issues
FINMA is the financial regulation governing body in Switzerland and embraces cryptocurrencies even if the Swiss National Bank remains skeptical due to potential money-laundering law issues.
Top investment banks share these concerns.
“From our standpoint, until you are able to trace all of these transactions and subject them to strict rules on anti-money laundering, this is a huge risk,” UBS chief executive Sergio Ermotti told the Wall Street Journal.
It’s well known that Switzerland has been trying to shake the reputation of being a haven for tax evaders and financial crooks over the past few years, and the issues that many cryptocurrency companies are facing is merely fallout from these measures.
FINMA has been in active talks with the Swiss National Bank to try and find ways to make Swiss banks more accessible to crypto businesses.
Lover of all things crypto, blockchain and AI, professional tech scribe & part of the editorial team at Crypto Disrupt.