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A Swiss Haven For Cryptocurrencies?

Apr 30, 2018

Switzerland has established itself as a financial haven, providing investors with high levels of privacy, security, and tax leniency. Perhaps this is what makes Switzerland an appealing location for cryptocurrency startups. Brian Blackstone, in his piece “Switzerland Wants to Be the World Capital of Cryptocurrency”, claims that four of the ten largest ICOs last year occurred in Switzerland (twice as many as the next closest country, the US). Switzerland also offers a highly educated talent pool, which is a critically important factor given the complex nature of cryptos. Switzerland represents an outstanding incubator for crypto-finance. 

The financial sector is an integral part of the Swiss economy but has recently come under threat. A Swiss Bankers Association study has determined that the number of banks in Switzerland has decreased by 20% (from ~325 in 2007 to ~250 in 2017). Due to Switzerland’s over-reliance on finance and banking for economic productivity, a further steepening of the decline in the financial sector would be significantly detrimental to the Swiss economy. Cryptocurrencies represent an alternative to Switzerland’s weakening financial system. It is difficult to deny the future potential cryptocurrencies offer. By creating a reputation as a crypto-friendly destination, Switzerland may be able to significantly capitalize on the exponential growth of crypto markets.  

While Switzerland would seem to offer the best opportunity for fostering successful cryptocurrency firms, it is not without its drawbacks. The Swiss Central Bank maintains a hesitant position regarding cryptocurrencies, as do powerful banking institutions in Switzerland, such as UBS. UBS CEO Sergio Ermotti has remarked that cryptocurrencies represent a significant risk until regulators are able to trace crypto transactions and “subject them to strict rules on anti-money laundering”. Switzerland is also attempting to distance itself from the stigma of being less than reputable and overlooking “shady” activities. Though cryptos have certainly risen in popularity, there is still hesitation regarding the legitimacy and credibility of many of the current cryptocurrencies. This may be a deterrent to Switzerland, as the country works to repair its image. 

Switzerland certainly offers numerous enticing features to cryptocurrency startups looking to grow their businesses. Though there are certainly risks for crypto firms to consider before relocating, Switzerland may represent the best opportunity to legitimately grow a large-scale crypto organization. 

The full Wall Street Journal article discussed: