When you think of Switzerland, what do you think of? Skiing? Chocolate? Cheese? Mountains? Women named Heidi skiing in the mountains while eating chocolate and cheese?
Switzerland certainly has all those things, although I’ve yet to meet a Swiss named Heidi (I live in the Italian part so I’m far more likely to meet Giulia). The next stereotype common in Switzerland is banking, it certainly takes up a large part of the economy. But while Switzerland has certainly played a role in establishing and strengthening the modern financial system, it also has a young healthy crypto and blockchain industry. Train ticket machines allow you to buy Bitcoin. And what makes Switzerland unique is that the government wants them to grow.
Zug is a small city of about 30000 people, situated on the important train route between Italy and Germany. The city is known for its business-friendly policies, and is home to many important businesses. It is also known for being home to the Crypto Valley where over 400 blockchain startups are located, who are members of the Crypto Valley Association (CVA). Take a walk around the business of Zug and you’ll see Bitcoin and blockchain signs everywhere. Over 3000 people are employed here in the Blockchain industry. The Zug government will accept Bitcoin for a variety of services (although one cannot pay taxes in Bitcoin just yet).
Its foundation is fascinating. Nikolas Nikolajsen worked at Credit Suisse, but quit his job in 2013 to start his own blockchain company, Bitcoin Suisse. Thanks to connections to the Zug government, he held a number of talks with the city and cantonal (the Swiss equivalent of a state) governments. In 2014, Zug laid out a number of cryptocurrency friendly policies. This attracted many other crypto-businesses, including the Ethereum Foundation, who is the team behind the Ethereum coin. Soon after Ethereum took off, numerous other people came into the valley to start their own companies.
In 2017, the CVA was created, after the ICO boom that increased the number of blockchain companies in the valley by a large amount. The CVA works to represent the startups as a block, and help facilitate discussions with the government. Additionally, just 2 weeks ago at the end of September, CVA set up the Crypto Valley Venture Capital (CVVC). The CVVC is an investment fund set up to provide new crypto startups with investment so they can get started in the Valley. A group of 20 startups will be the first to receive investments from the fund, starting in winter.
Its not only the Zug cantonal government that is supporting crypto businesses in Switzerland, the central government is also behind the plan. However, in recent months there has been worry by the big banks that not all these startups are following certain laws, such as money laundering. This has prompted two major banks in the past two months to stop working with cryptocurrency groups and projects. This has prompted some blockchain companies to relocate to nearby Lichtenstein or to Gibraltar. However, the Swiss government has stepped into action, and is working to look into the laws to ensure the crypto companies stay in the land of chocolate. In the end of September, the Swiss Banking Association announced it had come to an agreement with the government on setting up new guidelines for crypto startups to ensure the relationship between them and the banks remains strong.
This relationship has paid off. Switzerland is the holder of the “Crypto Crown,” thanks to its friendly policies. The banks benefit from having new companies they can loan and hold money for. The crypto businesses benefit from having strong infrastructure that allows them to grow and remain profitable. Additionally, thanks to the government policies, these blockchain corporations gain legitimacy which means more people not connected with the industry may do business with them.
Others have started to notice Switzerland’s success. Britain just released a report that recommended the government make moves to liberalize laws and work with cryptocurrency corporations, rather than try to stifle them. Even the new Finance Minister of Zimbabwe aspires to be like Switzerland. (However, this should be taken with a grain of salt, Zimbabwe is not known for good governance). Clearly Switzerland is doing right, if others are wanting to mimic them.
Consider this a message to all countries of the world: be more like Switzerland. It is not perfect, but it does a pretty good job. Part of this good job is how they treat cryptocurrency. You can buy Bitcoin at train ticket machines. You can see “Bitcoin accept here” signs often, especially in the bigger cities. It is home to the next Silicon Valley, the Crypto Valley. The government works with crypto startups, not against them, to ensure rules and regulations are followed. And the result? Switzerland does well, Zug does well, the banks do well, and the crypto corporations do well. Others can stand to learn.
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