Recently, much of the news related to cryptocurrencies and blockchain was surrounding their developments in Switzerland. This country — which is widely known in the financial world for its robust financial services offered and for the privacy given to a bank’s clients — is now home to Crypto Valley, which is located in Zug.
With conferences and events flourishing throughout the years, Crypto Valley is considered one of the most important hubs for experts, investors and enthusiasts to meet and exchange ideas and information. In this context, the Crypto Valley Association has been created, with the support of the Swiss government, with the objective of being “an independent, government-supported association established to take full advantage of Switzerland’s strengths to build the world’s leading blockchain and cryptographic technologies ecosystem.”
Financial system developments
It came as no surprise that a Swiss bank recently decided to becomes the first in country to offer business accounts to crypto companies. Swiss banks have always been known for their client orientation that, in the past, has mainly been related to the privacy and secrecy around customers’ accounts. Nowadays, as more and more Swiss are interested in the crypto world — both as investors and as founders of startups — bank products are in the process of being adapted.
The investing market is developing its offers by including trading of crypto assets among the products offered to their clients. Swissquote, an important bank in the country, is providing its customers a wide range of services for crypto trading because, as confirmed by Marc Bürki, the company’s CEO:
“Cryptocurrencies are increasingly popular, more quickly than anyone expected. By offering them on our platform, investing in cryptocurrencies becomes simpler, safer and accessible to all.”
Vontobel and Falcon Bank, two private Swiss banks, are already known as being among the lenders that are agreeing to handle cryptocurrency-based investments on behalf of their clients.
Crypto entrepreneurs are also flourishing in the country, as many Initial Coin Offerings (ICOs) are initiated in Switzerland. This environment is fostered by continued interventions and clarifications made by the national Financial Market Supervisory Authority (FINMA). Recently, this institution clarified some key rules regarding ICOs and how the tokens generated should be treated, based on their underlying function:
Payment tokens (synonymous with cryptocurrencies): Tokens which are intended to be used — now or in the future — as a means of payment for acquiring goods or services or as a means of money or value transfer. For which FINMA requires ICOs to adhere to the Anti-Money Laundering Act.
Utility tokens: Tokens that are intended to provide digital access to an application or service by means of a blockchain-based infrastructure. For which FINMA clarified that the securities regulations of the Stock Exchange Ordinance (SESTO) apply.
Asset tokens: Tokens that represent assets such as a debt or equity claim of the issuer. Asset tokens promise, for example, a share in future company earnings or future capital flows. Similar to the previous category, FINMA clarified that the securities regulations of the Stock Exchange Ordinance (SESTO) apply.
This set of rules is intended to ensure that market participants can base their decisions about investments on a reliable minimum set of information.
Blockchain as a voting tool: Swiss referendums
Switzerland is also widely known for the intense use of the referendum as a direct democracy tool, both for national and cantonal (i.e. regional) decisions. In 2016 and 2017, a total of seven referendums were held in the country in subjects such as energy, food security and the pension system. Voting is already possible via mail, internet and in polling stations.
Presently, blockchain is coming into play in this domain. In Crypto Valley, the city of Zug allowed residents to take part in a blockchain-based test vote, between June 25 and July 1, as this Swiss city evaluates whether the technology could be used on a broader scale. In addition to voting on minor municipal matters, citizens were also asked if a blockchain-based electronic ID system should be used for future votes. The test turned out to be a success.
Despite the fact that the vote in Zug was merely a test, with the results being non-binding for city authorities, this initiative demonstrates how blockchain’s security of transactions and traceability could provide benefits, not only to the finance sector but to many other domains, including the public sector.
Digital assets infrastructure
Financial and public sectors are not exempt from the developments of blockchain technology in terms of increasing accountability and traceability of information. In a recent speech, Swiss Federal Councillor Johann N. Schneider-Ammann spread his vision:
“We must shape this new world together — with optimism and boldness, but also with prudence and consideration. If we succeed, blockchain can provide new opportunities, new jobs, new levels of security and new prosperity.“
On top of that, Swiss Infrastructure and Exchange (SIX) Group, the parent company of Switzerland’s principal stock exchange announced that it is building a fully integrated trading, settlement and custody infrastructure for digital assets. The Swiss stock exchange is fully regulated as an operator of Financial Market Infrastructure (FMI) by Swiss authorities, FINMA and the Swiss National Bank, and intends that the planned 'digital asset ecosystem' to become a reality. Jos Dijsselhof, CEO of the Swiss Stock exchange, shared:
"This is the beginning of a new era for capital markets infrastructures. For us, it is abundantly clear that much of what is going on in the digital space is here to stay and will define the future of our industry."
Pierre-Edouard Wahl, head of blockchain at PwC Switzerland shared with Cointelegraph his optimistic vision of the Swiss stock exchange steps toward crypto trading:
“We have been involved in that project and are very proud to be a partner in this new adventure for SIX, we hope that it is going to have impact not only on the Swiss financial place, but really on the global level. I hope other jurisdictions will follow. We are really excited about it, we think that it will definitely provide much easier access to the institutional investors.”
Switzerland has historically demonstrated the right balance between innovation, accountability, privacy and security. The developments of the use of blockchain in the private and public sector and the creation of Crypto Valley are all demonstrating that those qualities are still there.