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Switzerland Wants to be The Crypto-Nation
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Switzerland Wants to be The Crypto-Nation

Earlier this year, Johann Schneider-Ammann, economics minister, said Switzerland wanted “to be the crypto-nation”. The country has become a hub for initial coin offerings, whereby start-ups sell digital tokens to investors, and a Swiss foundation is behind Ethereum, the second-biggest digital currency.

Switzerland should launch a cryptocurrency version of the Swiss franc as part of the Alpine country’s attempt to steal a competitive lead in digital technologies, its stock exchange chairman has urged. Romeo Lacher told the Financial Times that an “e-franc” backed by the Swiss central bank would boost the local economy as well as electronic payment systems which were increasingly replacing cash.

Romeo Lacher said:

“I believe there would be a lot of upsides, we would be strongly supportive,”

Cryptocurrencies are a controversial subject among central bankers, many of whom are sceptical about volatile currencies such as bitcoin becoming widely used. There is also uncertainty about whether monetary authorities should introduce digital versions of their own currencies.

Mr Lacher welcomed the government’s ambitions despite the potential risks and e said:

“I think the strategic direction is good. But it’s like going into fog. You don’t know what you will see on the other side. Many mistakes will be made, but we will also learn a lot and I am sure, we will be successful.”

He added:

“My worry is that until recently, the value of cryptocurrencies has only been in one direction — up. After the first ICO to collapse, there will be burnt fingers.”

In Switzerland the cryptocurrency craze is being treated as a fait accompli and the belief is that it should be supervised and regulated. Switzerland claims to be the home of ICOs (initial coin offerings). In fact, the country has announced an ICO working group to study regulation and supervisory practices.

Like Silicon Valley there is now a Crypto Valley in Zug, near Zurich. The Crypto Valley Association is an independent, government-supported association established to build the world’s leading blockchain and cryptographic technologies ecosystem. Crypto Valley has grown as planned and institutions and regulators like the Swiss Financial Market Supervisory Authority (Finma) give support to this professional organisation and dozens of leading cryptographic companies are now based there.

While China and South Korea have banned ICOs, Switzerland seems to prefer to be ahead of the game by endorsing and giving a favourable regulatory framework to any new currency launches. In a way it is understandable given that all this concerns a banking activity of which Switzerland is a global leader.

The risk for central banks if they do not launch digital versions of their currencies is that they hand control of payment systems to a “wild west” private sector.

Axel Weber, chairman of UBS, said last year central banks should be more open to creating digital versions of their currencies, which he said could offer significant benefits to society. As in other countries, Switzerland’s biggest financial institutions hope to develop applications using the blockchain distributed ledger technology behind bitcoin.

coinmag

Writer, Bitcoin investor

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