Blockchain - Switzerland
A number of factors contribute to Switzerland becoming the fertile ground for adoption of blockchain technology:
Switzerland is known for its flourishing blockchain sector. There are over 600 blockchain-based enterprises in the Crypto Valley in Zug and the neighboring Liechtenstein alone. In fact, Crypto Valley is growing to become one of the world’s leading blockchain ecosystems and crypto and distributed ledger technologies. The top 50 blockchain companies in the Crypto Valley employ some 440 people and together these units are worth an estimated $44 million and hold in excess of $2 billion to spend on research and development. And surprisingly, much of the funding has come from initial coin offering (ICO) and crowd investing programs.
Regulators as well as politicians give adequate support to the sector and their combined efforts in creating a legal and regulatory framework have helped the new technology to flourish. In fact, there is an often heard term ‘Crypto Nation’, which was in fact coined by Swiss Economics minister Johann Schneider-Ammann. In fact, there is a high blockchain knowledge level, the position of blockchain is at the start of the implementation phase and there are possibilities for startups to experiment with little investment in the Sandbox. Many industry watchers see blockchain as an influencing factor in sectors like financial services, insurance, logistics and healthcare in the immediate future.
It is also pointed out t hat the decentralized bottom-up political culture in the country matches perfectly with the decentralized, bottom-up cr ypto technologies of the future. One effort in this context is that of the state-run postal and telecoms services, which is building a national blockchain with an aim to recruit local businesses to convert to distributed ledger technology. It will be a private Swiss blockchain for launching locally operated ‘decentralized’ applications. All data it handles is said to be kept within Switzerland’s digital borders.
Similarly experiments are being conducted to create a new open-source ‘coinless’ blockchain project initiated by the Linux Foundation using Hyperledger Fabric. And Swisscom will be coming out with pilot applications using its new blockchain soon.
Today, several major players are coming to Switzerland to obtain financing through ICOs and nearly one third of the 10 largest ICOs took place in Switzerland.
Blockchain impacts all the sectors in the country. Finance and real estate sectors, in which transaction costs are high, are directly influenced by the technology. So are health and trade sectors. In Geneva, it is mentioned that several watchmakers accept Bitcoins in payment.
The Swiss Financial Market Supervisory Authority (FINMA) has recently issued banking and securities dealers’ licenses to 2 blockchain service providers for the first time. These 2 entities - SEBA Crypto and Sygnum - can now offer banking services for institutional and professional crypto clients under the supervision of the financial regulator. SEBA Crypto is expected to go live in early October 2019. It has said it will function in cooperation with the Swiss private bank Julius Baer. Sygnum, meanwhile, has developed a banking solution that embeds digital assets into regulated banking. It functions in collaboration with Swisscom and Deutsche Borse Group. It operates an institutional-grade digital custody and fiatdigital asset gateway.
FINMA has come out with guidance on how it applies the anti-money laundering rules to blockchain technology companies it supervises. It says it recognizes the innovative potential of new technologies for the financial industry and applies the relevant provisions of financial market law in a ‘technology-neutral’ way. However, it warns that blockchain-based business models cannot be allowed to circumvent the existing regulatory framework, particularly with regards to the rules for combating money laundering and terrorist financing.
Blockchain-related work and blockchain-based enterprises in Switzerland are mainly located in Zug, Zurich and Geneva. Of these, Zug was once a poor area in the country, sustained by manufacturing and fishing. One of the smallest of the 26 cantons it has a population of only 120,000 people. It also has one of the lowest tax rates. However, today it is headquarters for many huge global companies and one of the wealthiest cantons in the country. It is also using blockchain technology in its operation and is the first municipality in the world that accepts tax payments in bitcoin.