Swiss officials are increasingly eager to exploit opportunities which are presented by initial coin offerings. However, they stress that they do not want to compromise the integrity of their financial markets. In many other countries, politicians are also expressing concern about the cryptocurrency craze such as worries about security, regulation, volatility and a speculative bubble. However, this is all not happening in Switzerland.
The Alpine country wants to be a crypto nation. Out of the ten proposed initial coin offerings, in which start-ups have an opportunity to raise funds by selling tokens, four of them have been utilizing Switzerland as a base. The increasingly growing ICO industry is using Switzerland business-friendly reputation and supportive spirit. This is a reputation which was spoilt in the past decade’s scandals over the help its traditional private banks gave to wealthy clients in evading tax.
However, this has created a dilemma for Swiss politicians and regulators. Many are wondering how far they will go to encourage the digital wild West? The government has recently established an ICO working group that will consider possible actions that can be done by regulators and lawmakers.
More importantly, the country believes that there is a huge potential in the cryptocurrency ecosystem. However, the market is highly unregulated and is causing it to be not as disciplined as any other investment ecosystem. The Swiss government wants the ICO market to prosper, but without compromising the standards or integrity of the Swiss financial markets.
The cryptocurrency haven
Switzerland is one of the best places to make an ICO happen. However, they are worried that they will be viewed as a wild West. Digital pioneers believed that Switzerland emerged as an ICO have because there is a cluster of rich investors and technology specialists. In fact, a small canton called Zug which is located near Zurich, which has unofficially become the crypto Valley. In fact, the Crypto Valley industry Association said that they often receive 5 to 10 inquiries are days from start-ups around the world on how they can create a Swiss ICO.
At the core of ICO is the blockchain, which is a distributed ledger technology behind Bitcoin. It is fuelling the fantasies of speculative investors, but they are also threatening to disrupt the venture capital industry by slashing the cost of fundraising. In other words, this opens the possibility of investing in start-ups to anyone that owns a smartphone.
However, some practitioners do not like the term ICO, because it is often associated with getting rich schemes which seek to approach humor some investor protection regulations. Proponents of ICO believe that many tokens offer access to services or property rights and they are not meant as aspeculative investment. An alternative to calling these tokens are token generating events. However, many other European Union countries and the US have issued warnings on the dangers of ICO. Meanwhile, China and Korea have effectively banned them because of the high number of fraud.
So, what is contributing to Swiss ICO’s success?
There is another reason for Switzerland is cryptocurrencies success. This has been mainly because of its openness to business innovation. Swiss regulators are almost among the few in the world that has a deep understanding of the technology and how it works. However, there have been warnings within the country that some ICO cases were investigated for possible breaches of regulations which includes money laundering and the financing of terrorism.
Crypto traffic: regulators’ different views on ICOs
China, South Korea, Vietnam, Russia
US, UK, European Union, Hong Kong, Canada, Australia, Singapore
Switzerland, Gibraltar, Isle of Man, Cayman Islands, Mauritius
Experts believe that Switzerland is approached a cryptocurrency is highly pragmatic,but they may be, to a certain extent opportunistic. It can face competition from places such as Gibraltar, which can lead to damaging competition to attract ICO. Just being welcoming is not enough. They also have to look at where the consumer and market protection may be appropriate.
Many people who support digital innovation believe that there is no need for politicians or regulators to intervene in the market. The government’s only role should be incredibly welcoming because it is a huge opportunity for Switzerland. However, some may not think the same way.
Proponents of ICO believe that the technology itself will serve to become self-policy. Similar to how Airbnb property rentals site works, users will typically steer clear of anyone that has poor reviews. Hence, this will create a transparent ecosystem that if people pay more to hide, it will give a huge, opportunity to clean up the world.
However, Switzerland is unlikely to be so liberal. One of the biggest concern of the government is also that cyber currencies are being used for illegal purposes. This is especially a given since a Switzerland dominates the market for cross-border management of private wealth. They don’t want to find the same trap as banks have fought over 30 to 40 years. In fact, the government is extremely sensitive to things such as money laundering and knowing their customers.
Swiss ICOs are obliged to follow strict and time money laundering procedures anyway. If they do not adhere to these rules, traditional banks will typically turn away their funds. Also, Switzerland can try to categorizedifferent type of ICO’s. This can increase consumer protection. However, tougher rules could potentially kill the Swiss ICO business and drive it elsewhere.
Wrapping it up
Switzerland wants to ensure that they continue to have a competitive edge in blockchain technologies. By removing uncertainty about its legal framework, they hope that they can encourage more ICO is to be created within their country. The government does have a desire to continue to be a leading ICO hub and provide the right balance between innovation which will attract business and have a stable regulatory environment.