Switzerland is going out of its way to stop the departure of cryptocurrency projects and startups from the country. The lack of support from the banking sector is a challenge to the Swiss cryptocurrency market, otherwise presumed to have some of the most crypto-friendly laws in the region.
Neither a European Union nor a Eurasian Economic Union member state, Switzerland has been able to offer a unique environment favorable to its financial sector as well as the crypto industry.
However, it has become increasingly clear for cryptocurrency and blockchain related companies looking to set up a base in the country that the banking sector is not warming up to them, just yet.
The Swiss Cryptocurrency Market
With over 200 crypto startups already present in the region, the country still lacks a comprehensive framework allowing them to gain financial support services from banks.
That said, certain areas of the Swiss cryptocurrency market, such as the canton of Zug, dubbed Crypto Valley, already have over 50 domiciled blockchain and cryptocurrency companies.
The small town made headlines a couple of years ago after it started accepting payments in Bitcoin for select council services.
Soon after, a huge number of local businesses joined the trend, turning it into one of the most crypto friendly areas in the world. Zug is also home to Ethereum inventor, Vitalik Buterin, who settled there in 2014.
The lack of financial backing from the banking sector is bound to cause problems down the road for an industry that already employs thousands in the country, and whose growth potential is tremendous.
According to Zug’s finance director, Heinz Taennler, who spoke to Reuters, many of the startups are bound to leave because of this.
As noted by the director, most crypto companies continue to maintain banking relationships with institutions located in Liechtenstein. This has led to the creation of hundreds of jobs in the doubly landlocked micro-state.
As such, Switzerland is missing out on the full benefits of supporting crypto and blockchain businesses by shutting them out of the financial support system.
According to Swiss National Bank (SNB) board member, Thomas Moser, crypto firms have made requests to the country’s central bank to intervene.
Is a Solution Close at Hand?
The Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank (SNB) are apparently in talks to come up with a solution to this problem.
On the other hand, Swiss banks are wary of dealing with crypto enterprises because of the lack of clear regulation governing the handling of cryptocurrency businesses, especially regarding sensitive aspects like Initial Coin Offerings.
As such, banks have called upon Swiss financial regulatory bodies to come up with clear guidelines that will enable them to support the industry.
Zuercher Kantonalbank (ZKB), one of the biggest banks in the country, is said to have recently severed ties with crypto businesses in the country. This is a further blow to the Swiss cryptocurrency market.
Its involvement, and that of similar institutions, at least initially, is believed to have been instrumental in providing fundamental financial services that helped turn Switzerland into a promising crypto hub.
A ZKB spokesperson declined to comment on current or previous clients, instead stating that the bank has no dealings with cryptocurrency enterprises.
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