Switzerland is famous for cheese, chocolate, nifty multifunctional folding pocket knives AND some of the planets most outstanding natural beauty. It is also now the crypto capital of the entire world. You may wonder exactly how this country of just eight million people (and some pretty fabulous cheese) is taking the coveted top spot in a global fintech revolution. Well, direct democracy, the Crypto Valley Association, and a planned national digital asset exchange are just a few of the reasons.
Blockchain has found its perfect landing spot in among those stunning mountain vistas. Here, we explain it all, and more.
Direct Democracy – Political Decentralization
Direct democracy describes a system where each citizen has the right to vote on policy initiatives taken at a local or national level. Although, Switzerland is technically a semi-direct democracy, the Swiss political system is pretty much the closest in the world to a pure direct democratic system.
Citizens in Switzerland vote several times each year on matters of national importance. In principle, any citizen can bring a motion to change national policy or law, and with a certain number of signatures within a specified period, the proposal may be brought to the people for a vote.
Although there are elected representatives at the local and national level, they are not positions of power as we would know it in a representative democracy. The President of the Swiss confederation changes each year. Many Swiss people could not tell you who holds the position of President at any given moment in time. This is because the position of Swiss President is only a figurehead to represent the country in the same way as other single-representative countries. The role holds no political influence over national affairs.
Essentially, direct democracy is political decentralization. This makes Switzerland the closest thing the world has to a decentralized country. Plus, the Swiss were doing all this for decades before Bitcoin ever made decentralization cool.
Switzerland has historically been more supportive of financial entrepreneurship than many other countries. Its attitude to blockchain and crypto is no different.
In June, reports emerged that Swiss bank Hypothekarbank Lenzburg is the first to offer bank accounts to crypto customers.
Many regulatory authorities have been bumbling around trying to work out how to apply existing legislation to ICO regulation. Meanwhile, the Swiss Financial Market Supervisory Authority (FINMA) already released a guideline document back in February.
The document recognizes that existing legislation may not be suitable in all cases. It also describes the categorization of different tokens and their general treatment under Swiss law. Despite acknowledging that regulation is required in many cases, the accompanying press release stated the belief of the regulator that “blockchain technology has innovative potential.
Digital Asset Exchange
The most significant development so far in blockchain and Swiss finance is hot off the press. The Swiss SIX Exchange announced on July 6 that it is planning to launch a fully integrated trading, settlement and custody infrastructure for digital assets. Zurich-based SIX is a fully regulated exchange. The new digital exchange, with the moniker SDX, will be subject to the same scrutiny.
This is a huge step forward. According to the SIX website, the digital exchange will “provide a safe environment for issuing and trading digital assets, and enable the tokenization of existing securities and non-bankable assets to make previously untradeable assets tradeable.” The service is set to roll out in early 2019.
Even though Vitalik Buterin’s roots are in Canada and Russia, the Ethereum Foundation chose to plant itself in Zug, Switzerland. Now, Zug is home to over 200 blockchain companies and the Crypto Valley Association. The association comprises a wide range of companies, NGOs and individuals across a variety of sectors and originating from more than 20 countries.
Crypto Valley describes its 2018 goals as driving sustainable impact, thought leadership and pushing the agenda for Switzerland to become a Crypto Nation powered by the Crypto Valley Association. It also runs the Crypto Valley Conference, which hosted 650 attendees and 70 speakers in 2018, with presentations and discussions on the latest advances and future of blockchain technology.
Perhaps most importantly, Crypto Valley has put in place a code of conduct for its members. This also includes an ICO code of conduct which puts responsibilities on participating startups undergoing ICOs. They must follow particular rules such as keeping communities informed of the progress of the project and any associated risks. With crypto crimes on the rise, it is reassuring to see that CVA is taking this seriously.
There are broader initiatives that have the potential to integrate blockchain into Swiss society. As well as being home to Crypto Valley, Zug has been running a trial on blockchain-based voting for its citizens. Early in July, the Swiss News Agency reported that the pilot had been a success.
The city of Zug had previously set up an eID system in 2017. This is what enabled participating citizens to cast votes using their smartphones linked to the digital ID. Admittedly, the trial was small and the vote was non-binding given its nature as a pilot. Nevertheless, it represented a significant proof of concept for the city as a use case for blockchain and digital identity.
The government of Switzerland also previously requested a study into the possibility of a national cryptocurrency. Head of Swiss National Bank Thomas Moser seems to have quashed this, at least temporarily. He was unequivocal in his statement to the Crypto Valley Conference in June that the technology is currently “too nascent” for national adoption.
However, the conference also welcomed the Swiss Economic Minister, Johann Schneider-Ammann. He warned of being too slow, as well as too fast, in the adoption of technologies such as blockchain. He has also previously spoken of his vision of Switzerland becoming the worlds first “crypto nation.” A statement like this from a key government figure is a promising signal.
Seeing a stable country like Switzerland push the agenda for blockchain and crypto adoption is heartening. It is true that other countries are vying for the position of crypto capital of the world. Nevertheless, the overall politics and culture of Switzerland combined with the commitment to blockchain adoption make it the clear frontrunner in the game right now.
Plus, they really do have some excellent cheese.
Disclaimer: Cheese-based opinions given here are the authors own, and are probably entirely biased.
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