Switzerland seeks to regain cryptocurrency crown

The departures, which industry sources fear will continue, mean Switzerland is losing business to offshore rivals including Liechtenstein, Gibraltar and the Cayman Islands, where banks are more welcoming.

While crypto-related business in Switzerland is tiny compared with its traditional banking sector, it has grown rapidly and employs hundreds of people, according to local officials. Supporters also consider it a key innovation for the future of global finance. The wealthy Swiss canton of Zug, for example, has been dubbed ‘Crypto Valley,’ with 200-300 virtual currency entities opening there in recent years.

Zug’s finance director, Heinz Taennler, says they may leave if the government does not take steps to give them access to the banking system, without which they struggle to function.

“All their banking relationships are going to Liechtenstein,” he told Reuters. “These are hundreds of jobs that have been created, and every job is important.” Thomas Moser, an alternate member of the governing board at the Swiss National Bank (SNB), said some cryptocurrency companies had asked the central to intervene. “They raised concerns about problems with opening bank accounts, which was a worry for them, and asked for help,” Moser said.

“I said this was not something the SNB dealt with, but they should speak with FINMA. The Switzerland’s financial market supervisor, has held discussions with the SNB and bankers’ association on how to make banks more accessible to cryptocurrency ventures. “We would not want to close the door on the opportunities that such innovation (cryptocurrencies) might bring,” Moser added. Providing the legal framework to launch ICOs and for banks to do business with cryptocurrency companies is not easy. The risk of fraud and lack of transparency about who owns cryptocurrencies like bitcoin and ether have made regulators around the world wary. The US is among countries that are increasing scrutiny of the sector.

Swiss banks are urging the authorities to give them more clarity on the rules that apply to cryptocurrency projects before providing services to the market, and at least two important players have withdrawn for now.

Zuercher Kantonalbank (ZKB), the fourth largest Swiss bank and one of the few big banks in the world to welcome issuers of cryptocurrencies, has closed the accounts of more than 20 companies in the last year, sources said. A spokesman for ZKB declined to comment on any former or existing clients relationships, but said the bank does not do business with any cryptocurrency groups.

Another large Swiss bank kicked out crypto project Smart Valor at around the same time, said a person familiar with the project. The source declined to name the bank.

Only a handful of Switzerland’s 250 banks ever allowed companies to deposit the cash equivalent of cryptocurrencies raised in ICOs. At least two still do, Reuters has established.