Out of the world’s six biggest initial coin offerings (ICOs) last year, four took place in Switzerland, according to Swiss financial watchdog, Swiss Financial Market Supervisory Authority (FINMA).
Along with Gibraltar and Malta, Switzerland is fast becoming a global hub for blockchain and cryptocurrencies, with investors from all over the world moving there. Towns such as Zug, a small town of 120,000 people just a short drive from Zurich, and the southern Italian-speaking Swiss town of Chiasso, are beginning to make a name for themselves in the global crypto space.
Zug has long been a global economic center, attracting large investment firms, pharmaceutical companies, commodity trading groups and thousands of other companies all benefiting from a favorable corporate tax rate of 14.6%.
Lately, 200 blockchain companies have joined the incumbents in Zug, now being tagged as ‘Crypto Valley‘, so named after the association set up there in 2013 to attract startups to cryptocurrency. Since 2016, the town has even been accepting Bitcoin payments for social services and was the first town to install crypto ATMs.
One reason for Switzerland’s success as a center for blockchain and fintech, according to Swiss law firm MME, is the country’s openness to new business concepts and innovation. Marin Eckert MME partner said, “Swiss regulators are among the few that really have a deep understanding of the technology and how it works.”
Johann Schneider-Ammann, Switzerland’s economics minister, said that the landlocked country should strive to “become the crypto-nation” earlier this year, calling cryptocurrencies part of the “fourth industrial revolution”, yet the government, rather than fully embracing cryptocurrency, seems more focused on promoting blockchain technology enterprises.
Despite Switzerland’s tradition of banking secrecy which dates back to the Middle Ages, distributed ledger technology (DLT) has been of little interest to major banking players in the Alpine country. Some smaller banks have introduced cryptocurrency asset management schemes over the past few years but the larger banks remain skeptical.
Andrea Maechler, governing board member of the Swiss National Bank (SNB), suggested that blockchain technology had “potential”, but cryptocurrencies still weren’t “comparable with money”.
The Swiss Blockchain Taskforce clearly sees the potential of DLT. Based in Crypto Valley, the organization has released a white paper drawn up by some 50 industry leaders, scientists and political representatives with recommendations for the future regulations and strengthening of the industry.
The Swiss Federal Council created a regulatory sandbox last year to allow startups to experiment with fintech developments such as blockchain and to attract more such organizations to Switzerland.