The franc has had its day. The Swiss National Bank should issue its own crypto currency as legal tender, the eFranc. At least that is what Hans Gersbach and Roger Wattenhofer, two professors from ETH University in Zurich, think. They suggested amending the current monetary system in Switzerland by creating a CBDC that is accessible to the public. The eFranc will be a digital form of banknotes, a currency that would be held and traded on a distributed ledger for decentralized transaction validation. It would be an accepted form of legal tender and would be introduced as follows: the eFranc to be created by the Swiss National Bank (SNB) and commercial banks could obtain it from the SNB against eligible collateral or banknotes.
Ilias Louis Hatzis is the Founder and CEO at Mercato Blockchain AG.
No one really knows exactly where Satoshi was when he published the Bitcoin white paper, but Ethereum flourished from Switzerland’s Crypto Valley.
Switzerland’s crypto friendly ways have made it the best place in the world to launch a cryptocurrency startup. More than 1,000 crypto startups have made Switzerland their home. The leading crypto projects, like Ethereum, Bitmain, Shapeshift, Tezos, DFinity, Cardano and many others are based in Zug.
Crypto Valley is probably the most crypto-friendly jurisdiction in the world. In 2018, Johann Schneider-Ammann, Switzerland’s Minister of Economy, said that within 5 years, Switzerland should become the world’s first “crypto-nation”.
A few days ago, Switzerland made it even easier to to use cryptocurrencies and decentralized finance. The Swiss Senate has overwhelmingly approved legislation opening the door to cryptocurrencies and decentralized finance (DeFi) enabling companies to create digital shares, as well as a range of other tradable assets.
Swiss Council of States today approved #DLT / #Blockchain legislation with 42 yes to 0 no. Next step: Final vote end September. https://t.co/YLRIO6waxc @efd_dff #sif_sfi pic.twitter.com/AEv9nsiqq2
— SIF_SFI (@sif_sfi) September 10, 2020
Switzerland’s Blockchain Act, which received overwhelming approval last summer, is expected to come into force in early 2021. SIX has launched a prototype of its digital exchange and CSD, with the full launch is expected in Q4 2020. Moreover, starting February 2021 several Swiss cantons will start accepting tax payments in BTC and ETH.
Switzerland is one of the only jurisdictions where the guidelines are very clear and provide an environment where companies understand the boundaries and can work within a trusted environment to build viable businesses.
Other countries are taking vastly different approaches to regulation when it comes to crypto. Regulation of crypto in other countries, like India, China and the US. has been poorly defined, confusing and in some cases even hostile. For example, China has placed an outright ban on cryptocurrencies and ICOs. In the US, there has long been talk of regulating digital currencies, but as yet no laws have been passed. As you would expect, where regulation remains obscure, innovation flourishes to a lesser extent because entrepreneurs aren’t willing to take the risk.
To put things in perspective, Switzerland hosts more crypto startups than the rest of the world combined. The top 50 crypto companies in the Switzerland were valued over US$40 billion in 2019 and employed over 4,700 people, according to Crypto Valley Venture Capital. These companies account for 20% of the total market cap of the global crypto market.
Facebook also incorporated its Libra Association in Switzerland, and has applied for a payments license in the country, according to a statement by FINMA.
Last year, FINMA approved the first banking licenses to blockchain firms SEBA Crypto and Sygnum under strict money laundering guidance.
Switzerland has a stable economy which is not threatened by the emergence of the blockchain and crypto economy. The basic principle of the Swiss approach has been to avoid issuing specific legislation on blockchain or digital currencies. Instead, FINMA uses a set of guidelines to determine if a token is compliant with existing anti-money laundering (AML) or securities legislation.
Many public and private sector companies in Switzerland are experimenting with Blockchain for bringing a revolutionary change in their business processes. Swiss banks are also considering implementing this technology to disrupt the finance ecosystem. UBS and Credit Suisse are testing the trading potential of DLTs. Moreover, private banks such as Maerki Baumann and Arab Bank Switzerland have also started offering cryptocurrency services.
Entrepreneurship and innovation do not always see eye to eye with regulation. But creating the right kind of legislation that fosters growth is the only way to attract the most innovative companies.
The Swiss approach is innovation friendly. The Swiss environment is the ideal place for incubating crypto innovation. For the crypto economy to flourish, innovation, open regulation and deep trust are key. This combination is exactly what makes Switzerland a fertile ground.
If you are serious about building decentralized technology, you need to consider Crypto Valley, where your project can thrive. After your project reaches enough scale and success, you can always expand to the US and other jurisdictions. But Crypto Valley is the place to get started.
Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research)