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Today, Channel News Asia reported on Switzerland’s attempt to stop cryptocurrency companies from fleeing the country. A big cause of these departures has been the local banking rejection of bitcoin business. Interestingly, it is the Swiss regulators who are making the effort to halt the exodus.
Swiss business experts fear that the flight will continue as other countries with a more accommodating banking attitude towards cryptocurrencies will lure away more business.
Switzerland has long been a major international banking center and even though the cryptocurrency sector is currently only a small slice of that pie, it is considered to be a major employment growth driver for the near future.
The Swiss canton of Zug has been called “Crypto Valley” and is home to 100s of cryptocurrency companies. But the finance director of Zug is concerned that many of these job-generating startups may leave if they can’t get sufficient access to the banking system. The country of Liechtenstein, as well as a few others, have already been pulling some of these companies away. The crypto startups need a way to store and use the funds that they raise via ICOs. They can’t purchase equipment, nor pay bills and salaries without banking access.
A big part of the problems for the banks is that they need more clarity as far as what rules and regulations the Swiss government plans for cryptocurrencies. The banks don’t want to start opening accounts and lending money to startups only to later find that they are violating the law.
They also have a great fear of working with early-stage crypto companies which do not follow all regulations when launching their ICOs. The startups must understand and conform to KYC and AML regulations, otherwise, the banks will also be liable.
Of the more than 250 banks in Switzerland, only a few ever allowed cryptocurrency related business accounts and possibly only two still do. Zuercher Kantonalbank, one of the largest banks in Switzerland and an early welcomer of cryptocurrency projects, stopped being accommodating last year. It was large banks like this on which initially give Switzerland a big boost in attracting cryptocurrency startups. At one time Switzerland was ranked as the number two country in the world in terms of ICO funding. Its ranking has now dropped to sixth.
Top destinations for cryptocurrency ICO projects now are the Cayman Islands, the British Virgin Islands, and Liechtenstein.
To combat this drain, Switzerland’s banking regulators are working to clarify the AML rules and regulations for ICOs. The intent is to reassure banks that they can clearly and legally work with the crypto startups. But at the same time, Switzerland wants to ensure that they don’t become a haven for ICO scams and other financial crimes.
Do you think that Switzerland should loosen their banking laws, or say good riddance to those ICO startups?
Read the full Channel News Asia report here
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