With a burgeoning Crypto Valley and history of welcoming direct foreign investment, Switzerland has become a hub for blockchain start-ups.
In December 2018, Switzerland’s Federal Council announced its intentions to create a framework that allowed Switzerland to “establish itself and evolve as a leading innovative and sustainable location for fintech and DLT companies”.
However, despite the promises, legal certainty around DLT development has remained somewhat on the grey side. Until now.
Last week, the Federal Council put out an official notice saying that it would increase legal certainty for DLT and make it easier for companies to develop their products.
It states: “The proposal is aimed at increasing legal certainty, removing barriers for applications based on distributed ledger technology (DLT) and reducing the risk of abuse.”
CVA welcomes the Swiss Federal Council adoption yesterday of the dispatch on the framework conditions for DLT/blockchain.
— Crypto Valley (@thecryptovalley) November 28, 2019
These new laws should come into effect from January 2020.
Switzerland steps up plans to be Europe’s crypto hub
This latest news to come out of the tiny alpine nation reaffirms the county’s commitment to being a forward-thinking jurisdiction in this emerging space.
In fact, this is just one of a series of new measures in the country.
Just last month, the news emerged that Switzerland’s Crypto Valley centred in Zug (an infamous tax haven hamlet) plans to expand to the country’s capital Zurich.
As a veritable haven of financial traditionalists, Swiss banks, and well-established legal services, this would be a significant step for the crypto ecosystem’s growth.
Despite increasing pressure to work with cryptocurrency companies, big banks in Switzerland still have their feet firmly on the brakes. However, smaller banks are beginning to pick up the gauntlet.
This means that, for the first time, many crypto start-ups can open up a bank account and function as any regular start-up would.
Last but not least, Switzerland’s central bank is also exploring the use of digital currencies for trading.
What does this mean moving forward?
With Malta’s plans of being the epicentre of all things blockchain potentially marred by recent corruption issues, Switzerland may make up some lost ground.
The latest news from the Federal Council is certainly encouraging for companies in the space. Daniel Haudenschild, CEO of SIBEX liquidity providers based in the canton of Zug, said:
“The proposed laws will position Switzerland as a base of regulatory certainty around crypto and blockchain-based business models. This is tremendous news – now businesses must use and adapt the new licenses to fruition.”
He continued, “The market will determine the ultimate winner, but now companies can invest with more certainty around how the regulator will view their business, which will, in turn, eliminate a huge risk for businesses that are operating in the space.”
Alexander Schell, Executive Director of the Crypto Valley Association, said: “The Crypto Valley Association welcomes the move from the Swiss Federal Council to take action and proactively address the existing needs in the Swiss market.
“Investors, entrepreneurs, and businesses, in general, are always more attracted to legal certainty and an environment that takes them into account. Therefore again, Switzerland is showcasing its ability to permanently improve and not accept the status quo.”