Does it look like the first sign of exodus for crypto companies in the Confederation? It may not be the exact case although Switzerland may not keep its competitive advantage it used to have for the past few years.
Crypto companies not entitled any more to open bank accounts
It seems that a certain panic rose in the quiet and peaceful canton of Zug. Indeed, financial regulators are gathering their efforts after two important banks, namely Zürcher Kantonalbank (ZKB) and another one have decided to stop their partnership with several companies active in the crypto industry last year.
From a global perspective, although the cryptocurrency space represents a tiny portion of services compared to the traditional financial services sector, this industry has literally boomed and experienced a massive growth: hundreds of persons are active on a daily basis in this sphere.
From a quantitative perspective let’s note that only in the Zug canton, the hub nicknamed “Crypto Valley”, it is approximately 200~300 entities that settled their headquarters/foundations in this specific region for the past few years.
Heinz Tännler, head of the canton’s finances, highlights that several companies would be ready to leave and find other jurisdictions outside Switzerland if the government would not take necessary actions. According to him, it is of paramount importance that the companies already established in Switzerland stay; better conditions are thus necessary and essential.
He declared to Reuters that:
Heinz Tännler
“All their banking relationships are going to Liechtenstein. These are hundreds of jobs that have been created, and every job is important.”
On the other side though, a member of the board of the Swiss National Bank (SNB), Thomas Moser, stated that several crypto related companies asked the local national bank to intervene. Unfortunately, the answer they got was not the one expected as he noted:
“These companies raised concerns about problems with opening bank accounts, which was a worry for them, and asked for help. I said this was not something the SNB dealt with, but they should speak with FINMA”.
Nevertheless, this piece of news feared by many start-ups, but also by the entire crypto sphere, could be highly appreciated by other crypto-friendly jurisdictions such as Malta, Gibraltar, Liechtenstein or the Cayman Islands where financial institutions welcome this industry with open arms.
Banks highly concerned with AML
Banks dealing with cryptocurrency companies in Switzerland urge local financial regulators like FINMA and self-regulatory organizations (SROs) to provide them clearer structures, rules and guidelines as these financial institutions claim that regulation on this hot topic is vague and unclear.
The fourth largest banks in Switzerland -and the first cantonal bank,(~ CHF 290 Bio of assets in 2017) but a second bank as well took the decision to cease partnerships with companies active in the crypto sphere.
Reuters advances a total of approximately 20 enterprises that had their account closed within these respective banks.
A spokesperson from ZKB declined to comment on the current partnership between the bank and cryptocurrencies companies although it had been claimed that the cantonal bank is not active in this industry anymore.
The start-up led by the famous women entrepreneur Olga Feldmeier, Smart Valor, planning to launch a decentralized, community-based platform in order to tokenized alternatives investments has been requested to close its account with the second bank, unknown to date.
Swiss banks remain vigilant with start-ups that conducted ICO as some companies did not keep up with AML compliance & KYC rules. As a matter of fact, financial institutions in which those funds were deposited could also be exposed to this risk which could have severe consequences for them.
Nevertheless, there is also reason for hope in the Swiss crypto sphere. Indeed, two banks, namely Falcon Private Bank & Maerki Baumann both headquartered in Zurich, decided a while ago to expand their services portfolios and provide cryptocurrency assets for their clients.
Stephan Zwahlen, Maerki Baumann CEO, declared in an interview: “We are in principal open for such funds”.
Featured Image via Pixabay
