Crypto Friendly Countries: Switzerland

Amidst a flurry of anti-crypto news and regulations, there are still countries that value technological development and provide crypto enthusiasts with a supportive environment to invest on, trade, and develop cryptocurrencies and blockchain tech. Today, we look at Switzerland.

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Switzerland is a beautiful country in Central Europe famous for the magnificent Swiss Alps and their delicious chocolate. It was considered the happiest country in the world back in 2015 and it is still on the top 5 countries of this year’s list.

Photo from Wanderluststorytellers.com

Now, it seems that the country has earned a good reputation amongst crypto enthusiasts as well. The country was even dubbed as the “epicenter” of the cryptocurrency revolution.

Crypto Industry in General

Four years ago, when bitcoin was still foreign to many people, Zurich, Switzerland had set up its first bitcoin ATM. Two years ago, bitcoin was available for purchase from over 1,000 distributors in the country. And in the town of Chiasso, taxes can be paid with cryptocurrencies!

The small town of Zug was made known to the crypto community when Ethereum founder Vitalik Buterin called the town his home in 2014. The Ethereum Foundation is also based in the town.

Zug is currently home to around 200 blockchain companies. The town was fondly called the “Crypto Valley” but the Swiss Minister of Economic Affairs, Johann Schneider-Ammann, expressed his desire for the entire country to be recognized for its crypto advancements:

“In five or ten years, nobody will speak about the Crypto Valley Zug but about the Crypto Nation Switzerland.”

That plan is actually very realizable.

Photo from FINMA © Philipp Zinniker

ICOs

According to Swiss regulator, the Financial Market Supervisory Authority (FINMA), four out of the six biggest initial coin offerings (ICOs) held last year had taken place in Switzerland.

On February 16, 2018, FINMA released its guidelines for the handling of ICOs. According to the guidelines, the regulator focuses on the “economic function” and “purpose” of the tokens. They are categorized into three types with the possibility of hybrid forms:

Payment Tokens and ICOs

These tokens are used for transactional purposes only. Compliance with anti-money laundering (AML) regulations is required. They will not be treated as securities.

Utility Tokens and ICOs

These tokens provide digital access rights to an application or service. They will not be treated as securities unless they, in any way, function as an investment.

Asset Tokens and ICOs

These tokens represent assets. They function as investments like equities and bonds. These would be treated as securities.

“FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements under the Swiss Code of Obligations.”

 

Crypto Exchanges

Switzerland provides a safe regulatory haven for crypto exchanges to operate. Crypto trading is very much allowed in the country.

Just last month, the fifth largest exchange in the world Bitfinex, announced its intention of moving its legal, financial, and technical departments to Switzerland.

Sberbank, Russia’s largest state bank, also showed interest in opening a cryptocurrency exchange in the country. In late January, they announced their plan to introduce cryptocurrency trading through their Swiss subsidiary in Zurich. Crypto trading was not made available in their main branch in Russia as the country’s regulations hinders such technological progress.

Photo from Sberbank

Crypto Mining

Switzerland has 600 hydroelectric plants—a good renewable source of energy. Crypto miners can mine their precious coins without having to worry about wrecking the environment. Some cities and towns in the country are situated in high altitudes and can provide natural cooling for mining servers which can get pretty hot.

When it comes to costs, it’s not as expensive to mine crypto in Switzerland as it is in South Korea but it’s not exactly cheap either. Ludovic Thomas, Alpine Mining co-founder said:

“Some of the world’s biggest crypto mines are in China. They burn fossil fuels and could be shut down by the authorities from one day to the next. It may cost more to mine crypto in Switzerland, but environmental credentials and stability are priceless commodities.”

Alpine mining is a Swiss crypto mining company situated in Gondo, Switzerland. The village’s eco-friendly power source, high altitude, and attractive power costs are what led the company to do its business there.

In January, the bitcoin mining giant Bitmain set up its Swiss subsidiary in Zug amid reports of the Chinese government wanting to get rid of the crypto mining industry. The company explained:

“Bitmain Switzerland will play a key role in our global expansion.”

 

Swiss Banks and Financial Service Companies

Swiss banks are divided towards cryptocurrency. Some banks were very eager to dive right into the technology while some would rather keep their distance from it.

Swiss bank Vontobel has created the first structured bitcoin product. It is a tracker allowing investments in shifting bitcoin values without having to directly purchase the coin.

Falcon Private Bank offered asset management services for cryptocurrencies.

Swissquote offers crypto trading.

UBS and Credit Suisse are among the banks that do not want to have anything to do with crypto.

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