Stringent regulations and unwelcoming banks are causing Switzerland to lose business in the cryptocurrency sector to its crypto-friendly rivals like Lichtenstein, Gibraltar and the Cayman Islands, Reuters reported. Recently, two Swiss banks reportedly shut their doors to cryptocurrency projects, leaving behind only a handful of financial institutions to allow crypto firms to have bank accounts.
The reported exodus of crypto firms is painting a dire future for Switzerland, even though the crypto sector in the country is still quite small compared to its banking sector. Still, crypto activities in Switzerland have grown rapidly in recent months, employing hundreds of people, according to local officials. Proponents of the industry describe cryptocurrency as “a key innovation for the future of global finance.”
“Crypto Valley” Zug, for instance, is home to between 200 and 300 virtual currency entities. Heinz Taennler, financial director of the municipality, is concerned that these firms will leave the country if the government doesn’t step up and address their concerns, particularly with banks.
In an interview with Reuters, Taennler said, “All their banking relationships are going to Liechtenstein. These are hundreds of jobs that have been created, and every job is important.”
Some of the crypto firms have already turned to the central bank for help, but according to Thomas Moser, an alternate member of the governing board at the Swiss National Bank (SNB), “…this was not something the SNB dealt with, but they should speak with FINMA,” the country’s financial market supervisor.
Moser said FINMA has already opened discussions with the central bank and Swiss bankers’ associations to address the issue, noting, “We would not want to close the door on the opportunities that such innovation might bring.”
Meanwhile, Swiss banks are calling for more clarity on the rules that apply to cryptocurrency projects before providing services to the market. So far, two Swiss banks have already cut their connections with crypto-related companies. One of these is Zuercher Kantonalbank, which is considered one of the biggest banks in the region, according to the news outlet.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.