Canton of Zug – Idelto

First Point of Contact for Crypto Assets

Swiss Crypto Company Acquires License to Distribute Funds to Investors

Crypto Fund AG, a Zug-based subsidiary of the Swiss Crypto Finance Group (CFG), has received a license to distribute collective investment schemes to qualified investors, Reuters reported. According to an announcement by CFG, this is the first time a crypto business is granted such permission by the authorities in Switzerland.

The Swiss Financial Market Supervisory Authority (FINMA) confirmed the decision. However, the financial watchdog did not specify if this was in fact the first license of this kind.

According to another important clarification in the report, the permission does not mean the firm is allowed to operate as an asset manager for crypto funds. Nevertheless, the acquired license is a deliberate step, as confirmed by the company’s Chief Executive Officer, Jan Brzezek:

Getting the FINMA license is a big step in the right direction to establish us as the first point of contact for crypto assets.

Crypto Fund AG is also seeking another permission from financial regulators in Switzerland. This one would allow it to create a passive investment vehicle tracking a bench marked index of up to 10 of the most liquid cryptocurrency assets and digital tokens on the market. The index is calculated and maintained by Swiss bourse SIX.

Crypto-Friendly Nation with Positive Attitude

Getting the FINMA license is a big step in the right direction to establish us as the first point of contact for crypto assets.

In recent years, Switzerland has established itself as a crypto-friendly jurisdiction. The country has its “Crypto Valley” in the canton of Zug, where Crypto Fund AG is registered. Many other crypto and blockchain businesses are either headquartered or represented there, including companies like the Chinese mining giant Bitmain. The Alpine nation has been considering the possibility to issue a state-backed cryptocurrency, although its central bank has admitted through an official that private digital currencies are better than any state-issued coin.

Businesses from the traditional financial sector have also benefited from the positive regulatory attitude of Swiss authorities. Hypothekarbank Lenzburg, a legacy financial institution, recently announced it was offering bank accounts to crypto companies, as news.Bitcoin.com reported. The bank’s management expressed desire to work with the young crypto sector, speaking of that as a “matter of credibility.”

But not only the private fintech industry and financial sector are interested in cryptocurrencies and the underlying distributed ledger technology. The fully state-owned Swiss Federal Railways, for example, has been selling bitcoin to its passengers for almost two years at over 1,000 ticket vending machines.

And the city of Zug, home of the Crypto Valley, is accepting payments in bitcoin and ether for municipal services, including company registrations. Authorities there are also planning to conduct a blockchain-based vote on questions of local importance.

Do you think Swiss regulators will issue more licenses for crypto-related financial services in the near future? Tell us in the comments section below.

Images courtesy of Shutterstock, Financial Club, National Police of Ukraine.

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“Private Digital Money” Better than State-Issued, Swiss Central Banker Says

Private digital currencies are better than any state-issued version, admitted a high-ranking representative of the Swiss National Bank. Cryptocurrencies are also less risky, according to Andrea Maechler, member of the central bank’s governing board. Her comments indicate that Switzerland has no intentions to emit a state-sponsored crypto.

Also read: Centralized Cryptoruble Not Possible, Minister Tells Putin

Digital Central Bank Money Brings Risks

“Private-sector digital currencies” are better and less risky than any version that might be offered by a central bank, the representative of the Swiss National Bank’s management thinks. “Digital central bank money for the general public is not necessary to ensure an efficient system for cashless retail payments”, Andrea Maechler said during an event in Zurich. She went on to explain why a crypto issued by a central bank could increase the risk of bank runs.

A government-backed cryptocurrency would make it easier for people to transfer money out of their accounts, if they felt a bank was in difficulties. “It would deliver scarcely any advantages, but would give rise to incalculable risks with regard to financial stability,” Maechler said, quoted by Reuters. In her option, a state-issued cryptocurrency would be calling into question the „tried and tested two-tier system” in which the SNB acts as a bank to commercial banks, which in turn deal with end customers.

Not all of Mrs. Maechler’s remarks were positive about cryptos. She thinks “cryptocurrencies are not true competitors to conventional currencies”, despite the soaring interest in bitcoin. The hype has outweighed their actual use, the banker says. SNB’s representative also pointed out that money must be a viable medium of exchange, a stable unit of account and a long-term store of value – functions that, in her words, cryptos don’t perform. Digital coins are also highly volatile, and a speculative investment instrument rather than a means of payment, she added.

However, neither the unexpected recognition of cryptos, nor the usual talking points against them, are what makes Andrea Maechler’s speech important. What deserves attention is the indication that the central bank and the government of Switzerland have no immediate plans, or even desire, to launch a state-sponsored cryptocurrency.

Cryptos Have What Swiss Banks Used to Offer

With an “e-franc” project, Bern could join a club of governments tempted to control at least one “crypto”. The leader in this competition, Venezuela, became the first country with a state-issued digital coin. The ”oil-backed” petro comes to partially replace the hyperinflated fiat bolivar. Russia has been mulling over a cryptoruble but the idea has been put on the backburner for now. Its central bank thinks it is “not appropriate”, and the finance ministry informed Putin a centralized crypto is not even possible. Sweden has been thinking about an “e-krona”, and Poland is reportedly developing an “e-złoty”.

Switzerland, however, has never been eager to join clubs of any kind, it takes pride in its independence. Swiss banking practices have been a good example of that for many years, before pressures from tax authorities, both American and European, increased. The attitude towards cryptocurrencies may become another proof of Switzerland’s independence.

The Alpine confederation is already regarded as a crypto-friendly jurisdiction, where many crypto businesses are headquartered or represented. It has become one of the first countries to establish a crypto valley, in the Canton of Zug. The Chinese mining giant Bitmain opened a branch there, and one of Russia’s largest banks, Gazprombank, announced plans to test cryptocurrency deals in Switzerland.

Decentralized, unregulated cryptocurrencies offer what the country provided to Swiss bank account holders for a very long time – security and anonymity. Sometimes it looks as if Switzerland is wondering whether it can do it again in a crypto environment.

Do you think Switzerland will continue to embrace cryptocurrencies? Share your expectations in the comments section below.

Images courtesy of Shutterstock.

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