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Switzerland's Crypto Policy: A Global Blueprint?

As the Securities and Exchange Commission (SEC) scrutinizes centralized exchanges (CEXs) and Web3-connected banks, the regulatory landscape in the U.S. is murkier than ever. Even given the Grayscale and Ripple’s recent wins over the SEC, the regulators’ stance on crypto-related products and services remains unclear. In contrast, Europe is pushing towards a more positive narrative. 

Switzerland, for one, has emerged as a sanctuary for crypto firms. Recent developments like the Cantonal Bank Zug providing crypto services and the widespread availability of crypto ATMs underscore the nation's commitment to blockchain technologies. First and foremost, its appeal as a crypto hub is rooted in comprehensive regulation and innovative spirit. Unlike the U.S., which is grappling with the ontological complexities of whether a cryptocurrency is a security, commodity, or some elusive hybrid, Switzerland established a well-structured legal framework around crypto in 2018. 

So, how can Switzerland's progressive stance become a role model for other countries, and offer an efficient guideline and roadmap for regulators? 

Progressive Regulatory Approach

Switzerland has always been ahead of the curve in terms of embracing and regulating crypto that’s why Brighty App’s team decided to choose this country to build the banking product. Swiss proactive approach was further cemented with the 2021 Distributed Ledger Technology (DLT) law, which provided a solid legal foundation for digital securities, positioning Switzerland as a global leader in the industry.

Yet, it’s not just about the country’s laws, but also Switzerland’s drive in fostering a thriving crypto ecosystem. The Swiss region of Zug — often referred to as the "Crypto Valley" — has become a magnet for blockchain companies and disruptive innovators, leading to a regional valuation of $611.8 billion by the end of 2021. The local government even allowed citizens to pay their taxes in Bitcoin.

Also, the role of the Swiss Financial Market Supervisory Authority (FINMA) has been a pillar of regulatory clarity, being the first to approve a crypto fund in accordance with Swiss regulations. This level of clarity has made Switzerland an attractive destination for crypto firms who can know exactly where they stand when they set up shop in the country.

Contrast this with the United States, where regulatory ambiguity has often acted as a deterrent for crypto companies. The lack of a clear framework has led to what some call "Operation Choke Point 2.0," effectively souring the environment for crypto enterprises. Switzerland, on the other hand, offers regulatory clarity and crypto-friendly banks like SEBA and Sygnum, which provide essential services like tax statements, coin storage, and deposit insurance.

The Swiss Advantage: Benefits of Clear Regulations

Lack of regulatory clarity often creates a major gap between fiat and digital currencies, which breeds division and confusion among businesses, investors, and consumers alike. However, with clear regulations, fiat and crypto can coexist in a symbiotic relationship, as some regions in Switzerland are already showing. 

Zug’s Cantonal Bank aims to bridge this gap by adopting more crypto service offerings. PostFinance, the country’s fifth-largest financial services firm, has also started offering its users access to cryptocurrency. BBVA also launched the ‘Blockchain to go’ initiative earlier this year, which provides necessary knowledge and education for companies and people to enter this field with more confidence and security. 

These initiatives have created a fertile ground for innovation, attracting over 960 crypto-based startups in the country, and creating employment opportunities for over 5,000 people. This kind of conducive environment attracts investors and traditional financial institutions. The clarity in regulation provided by FINMA gives these entities the confidence to invest in and collaborate with crypto firms, knowing that they are operating within a well-defined legal framework. 

When it comes to taxation, Switzerland's policies are far more favorable compared to countries like the United States where crypto transactions can trigger capital gains tax. Cryptocurrencies are treated as assets, and only professional trading activities are subject to income tax, making it an attractive destination for long-term investors. 

Some argue that Switzerland's crypto-friendly stance could make it a haven for illicit activities, but this overlooks the stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations that companies must adhere to under Swiss law.

A Blueprint for Governance and Education

Switzerland's clear and progressive regulatory approach offers a blueprint for how countries can foster innovation while ensuring security and compliance for their citizens. It creates a win-win scenario for traditional banks, startups, institutional investors, and consumers, setting a standard that the rest of the world would do well to follow. As digital currencies become increasingly mainstream, regulations like Switzerland’s may show other nations a cooperative path forward for these new technologies.

Even beyond crypto governance, countries should look to explore the economic benefits of digital assets such as clarity—job creation, startup incubation, and financial diversification. They should consider not just regulation but also education. Governments could establish crypto literacy programs, similar to Switzerland's own initiatives, to empower citizens to navigate this new financial landscape responsibly. By doing so, nations won't just be regulating crypto; they'll be democratizing access to financial innovation.


Comments: (1)

A Finextra member
A Finextra member 30 October, 2023, 21:462 likes 2 likes

The regulatory clarity provided by FINMA also instills confidence in investors and traditional financial institutions.

Nikolay Denisenko

Nikolay Denisenko

Co-Founder & CTO

Brighty App

Member since

23 Oct


Baar, Zug

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