Switzerland renowned as a crypto-friendly nation due to its virtual currency hub, “crypto valley,” in Zug and its status as a tax-free haven for crypto investors, is losing popularity among crypto companies due to its more stringent regulatory framework.
The country dropped from second place last year to sixth in 2018, in a PwC country ranking of the sum of initial coin offering (ICO) funds raised.
Now the Swiss government is attempting to make a U-turn on banking policies in an effort to halt the exodus of businesses to more popular off-shore jurisdictions where the crypto ecosystem is more cooperative.
According to a report from Reuters, Switzerland is bleeding cryptocurrency businesses to offshore rivals such as Liechtenstein, Gibraltar, the British Virgin Islands, and the Cayman Islands, following the publishing of its ICO guidelines in February 2018.
Senior government officials have raised concerns that many of the 200-300 virtual currency entities operating the country may leave if the government does not give them access to the banking system, without which they struggle to function.
Thomas Moser, an alternate member of the governing board at the Swiss National Bank (SNB), said some cryptocurrency companies had asked the central to intervene.
“They raised concerns about problems with opening bank accounts, which was a worry for them, and asked for help,” Moser told Reuters.
FINMA, Switzerland’s financial market supervisor, has held discussions with the SNB and bankers’ association on how to make banks more accessible to cryptocurrency ventures.
“We would not want to close the door on the opportunities that such innovation (cryptocurrencies) might bring,”
It is unclear how long it will take Switzerland to create new rules to reassure banks and encourage them to accept the accounts of cryptocurrency companies. Switzerland’s authorities have said they want to create conditions for the country to remain competitive but with no room for scams or financial crime.