Switzerland as preferred location for crypto companies
In 2014, the Ethereum Foundation chose Switzerland as the most suitable location for its activities, which now has become famous all over the world as the “Crypto Valley”. Since then, many other companies have chosen Switzerland as their headquarters up to the recent case of the Libra Association that raised the interest of the world’s leading governments for its project of a global stablecoin, which is usable on Facebook.
The latest research data shows that the total number of companies in Crypto Valley alone is 919, while employment has increased to 4,784 people. The top 50 companies employ 776 employees in Crypto Valley alone.
In September 2020, the Ticino Blockchain Technologies Association was born in the Canton of Ticino, an aggregator of initiatives in the blockchain field that wants to extend the Swiss ecosystem by connecting universities and research centers with private companies.
Switzerland leader in the world of finance
Why does Switzerland have such a concentration of companies in the sector? There are reasons linked both to the political choices of the Swiss Federation and to the financial history of this country.
In an international comparison, Switzerland is one of the main financial centers in the world and is among the most competitive. Almost a quarter of the world’s foreign assets are managed in Switzerland, which implies the presence of a large number of banks and insurance companies. The financial sector is a backbone of the Swiss economy and accounts for around 10% of the gross domestic product.
The Swiss financial center is primarily a market for capital and asset investments. Zurich, Geneva, Basel and Lugano host some of the most significant financial centers in the world. The reasons for this success are to be found in Swiss legislation, which is favorable to economic activities. In the past, banking secrecy and low taxes have been of great importance. Furthermore, thanks to Switzerland’s neutrality, its financial center played an important role on the international market during the two world wars.
Swiss regulatory framework facilitates crypto companies
One of the main problems of companies that operate with cryptocurrencies is full compliance with the regulations and laws of the country in which the company is incorporated and the countries in which it operates.
Switzerland has worked actively in recent years, in a legal framework perspective, to establish itself as a crypto hub . The political choice was to be competitive in this new technology and create the conditions to have leading companies in the world market, as the USA did with the web. Switzerland sees blockchain technology as an opportunity to attract crypto companies by providing them with clear, accessible and well-structured regulations.
This was done before other countries, which have long been trying to understand how the sector could be regulated and whether or not it could fit into existing legal frameworks.
Switzerland was able to quickly draft new consultations regarding blockchain-based businesses. These guidelines outline a set of rules that every crypto company must strictly follow. The regulations were designed to protect consumers by stimulating the country’s economic progress.
Role of FINMA
The regulation of Swiss financial markets is principle-based and technologically neutral. The treatment reserved by the Federal Financial Market Supervisory Authority (FINMA) for cryptocurrencies and stable coins follows the existing approach adopted for blockchain-based tokens: the focus is on the economic function and the purpose of a token. When deciding on specific projects, FINMA follows the principle of the same risks, same rules and the specific characteristics of each project.
FINMA published guidelines that define how to apply financial market legislation in the management of token sales (ICO) from February 2018. The guidelines also define the information FINMA needs to process and the principles on which it will base its responses, creating clarity for market participants.
In assessing the ICOs, FINMA focused on the economic function and purpose of the tokens issued by the organizer of the ICO. The key factors are the underlying purpose of the tokens and whether they are already tradable or transferable.
FINMA published a supplement to its ICO guidelines in September 2019 outlining how it treats stablecoins under Swiss supervisory law. FINMA has seen a steady increase in the number of stablecoins since 2018. In this context, FINMA has received a request from the Libra Association for the evaluation of its project under Swiss supervisory law.
Unlike Liechtenstein, which created a new ad hoc law for the blockchain, Switzerland did not find it necessary to do so, given its regulatory flexibility, by only modifying existing laws. The Swiss Federal Council stressed that, as blockchain is still under development, a fundamental adaptation of its legal framework could have unforeseen consequences.
On September 10, 2020, the Swiss parliament passed a law to update existing corporate and financial regulations to make way for DLT technology. The law will go into effect early 2021. This Blockchain Act aims to accommodate decentralized technologies while maintaining Switzerland’s integrity and reputation as a commercial and financial center. The Blockchain Act passed to the Swiss Senate without opposition, after an initial consultation in December 2018.
Monetum’s attention and commitment to regulation
Monetum is a business of Fenice Holding SA, a Swiss company that has existed since 2016. Switzerland was chosen as the jurisdiction for its utmost attention to the Crypto industry and for its forward-looking approach from a regulatory perspective. In this context, Monetum has ensured to obtain a regulatory and compliance assessment of the most thorough level, in order to provide maximum certainty to users of the Exchange and investors in the MOM token.
Currently, Fenice Holding SA is in the process of obtaining the VQF membership. Fenice Holding SA is operating in accordance with the AMLA.