Switzerland is known to be one of the friendliest countries towards crypto and blockchain projects. Its canton of Zug, which has taken on the nickname of The Crypto Valley, saw over 200 crypto startups launching there. However, local banks are not ready to give a hand to the crypto space. For example, two of the few banks that were dealing with the emerging market halted their crypto operations last year. Now, local regulators are trying to help the country maintain its attractiveness for crypto projects and stop the drain of projects that’s started, and which can continue under the current conditions.
If nothing is undertaken, many projects might choose to move to other places such as Gibraltar, Malta, Lichtenstein, or the Cayman Islands, where banks are more open for collaboration, with Malta even having laws that support the crypto space.
Local officials noted that the crypto business in Switzerland might grow to become essential in the future. It currently employs several hundreds of people. Zug’s finance director, Heinz Taennler, told Reuters that these jobs could be lost if the crypto businesses continue to be denied access to banking.
“All their banking relationships are going to Liechtenstein. These are hundreds of jobs that have been created, and every job is important,” he said.
Thomas Moser of the Swiss National Bank (SNB) said that some crypto firms asked the central bank to get involved. Moser told Reuters:
“They raised concerns about problems with opening bank accounts, which was a worry for them, and asked for help. I said this was not something the SNB dealt with, but they should speak with FINMA.”
FINMA is Switzerland’s financial regulator. The agency has had talks already with the SNB and bankers’ association to find solutions on how to open banking access to crypto firms.
“We would not want to close the door on the opportunities that such innovation (cryptocurrencies) might bring,” Moser said.
On the other side, banks want the government to make clear the rules that apply to blockchain and crypto projects prior to opening their doors to the new space. Currently, at least two local banks allow crypto firms to deposit their cash equivalent to the cryptocurrencies raised during initial coin offerings (ICOs), a form of crowdfunding. This is not enough, though, when compared to the total number of 250 banks operating in Switzerland.
The banking firms are worried about the poor AML verifications of ICO investors.
The issue might be part of why in terms of the total ICO funds raised by county, Switzerland fell from the second to the sixth place in annual terms, according to a PwC study published in June.