Switzerland Makes It Easier for Blockchain Companies to Open Bank Accounts
Switzerland is making it easier for blockchain startups to access traditional financial services after several projects decided to leave the country over strict banking laws. The new guidelines are part of a wider initiative to help Switzerland maintain its status as the epicenter of cryptocurrency innovation.
SBA Issues New Guidelines
On Friday, the Swiss Bankers Association (SBA) announced new guidelines for financial institutions looking to do business with blockchain startups. The rules will make it easier for banks to service the blockchain ecosystem and for the companies themselves to set up bank accounts in the country.
“We believe that with these guidelines, we’ll be able to establish a basis for discussion between banks and innovative startups, making the dialogue simpler and facilitating the opening of accounts,” SBA strategic adviser Adrian Schatzmann said in a news conference, as quoted by Reuters.
The new measures provide “more clarity not only to banks, but also to startups,” said Oliver Bussmann, head of the Crypto Valley Association.
Although blockchain companies are not barred from opening up Swiss bank accounts, existing regulations make it difficult for them to quality for corporate banking services. Swiss banks have been hesitant to serve the growing sector over fears of violating know-your-customer (KYC) and anti-money laundering (AML) obligations.
Banks are especially concerned over initial coin offerings (ICOs), the controversial crowdfunding system that allows companies to raise millions of dollars by issuing tokens. Several ICOs have raised funds without conducting AML checks on their investors. Banks that service such firms would be at risk of falling out of line with existing AML guidelines.
Switzerland’s fourth largest bank, Zuercher Kantonalbank (ZKB), has already closed the accounts of more than 20 blockchain firms. According to Reuters, only a small handful of the country’s 250 banks ever allowed blockchain companies to deposit the cash equivalent of their token raises.
Under the new guidelines, banks will have the opportunity to distinguish between blockchain firms that carry out ICOs and those that do not. For token projects, KYC and AML guidelines are still enforced.
Crypto Valley Switzerland
Switzerland quickly emerged as a leading hub for the blockchain industry after a government-sponsored institution launched Crypto Valley, an ecosystem based in Zurich and Zug that incubates new cryptocurrency startups. Hacked shined the spotlight on Crypto Valley last October after several dozen high-profile firms set up shop in the region. Crypto Valley is now home to roughly 530 blockchain companies.
Despite offering a more liberal environment for cryptocurrency startups, Switzerland clamped down on the market in February by issuing more stringent ICO guidelines. This seems to have triggered a mass exodus of cryptocurrency startups, which have since made their way to Liechtenstein, Gibraltar and Cayman Islands. The new rules categorized ICOs into three separate buckets: payment, utility and asset.
SBA is hoping to stem the outflow of blockchain projects by giving them more avenues to traditional banking services. However, with several countries liberalizing their blockchain laws, it remains to seen whether Crypto Valley can maintain its leadership pace.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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