Switzerland, though it has a reputation as a crypto-friendly territory, is rapidly losing its ICOs due to uncertainty around its banking regulations.
In 2017 Switzerland was placed second in a ranking of ICO funds raised by country.
Indeed, it proved so popular with ICOs that the municipality of Zug was nicknamed “crypto valley”. Since then the appeal has diminished considerably, with Switzerland falling to sixth in the rankings, behind the Cayman Islands and British Virgin Islands.
The chief problem is how to provide banking services to ICOs. Only a small number of Swiss banks were ever interested in offering these, and in the last year two of those have stopped.
Switzerland’s looser regulations allow it to take business from larger EU countries. As the world becomes increasingly globalised it is now facing competition of its own, from tiny territories with even looser regulations. Liechtenstein, the Cayman Islands and Gibraltar are particularly appealing alternatives.
Zug’s finance director Heinz Taennler is one of those sounding the alarm. The crypto companies’ “banking relationships are going to Liechtenstein,” he said in an interview with Reuters.
There have even been calls by some cryptocurrency companies for the central bank to get involved. According to Thomas Moser, who sits on the board of the Swiss National Bank (SNB), companies had “raised concerns about problems with opening bank accounts,” and had “asked for help.” Mr. Moser suggested that they contact FINMA, the Swiss regulator.
Swiss banks are reluctant to offer financial services to crypto companies without more clarity from FINRA. Zuercher Kantonalbank, one of the biggest players in the Swiss banking scene, is one of the few banks which has been willing to countenance ICOs as customers. Even so, according to industry sources, it has closed the accounts of more than 20 in the last year.
Though Switzerland would prefer to remain appealing to ICOs and crypto companies, it fears providing a haven for criminals or scams. The finance ministry is currently studying the issues involved and will report back by the end of the year.
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