In this article, inspired by the joint talk given by our Managing Partner Sheraz Ahmed and Head of Legal Nicola Massella at Blockchain Week Rome 2021, we will explain why Switzerland should be at the top of your list when considering where to open a crypto business. Whether you’re a seasoned entrepreneur or a first-time founder, setting up your company in the Swiss Crypto Valley is an option worth considering.
Switzerland and the Crypto Valley
Switzerland is often referred to as the Crypto Valley due to its long history in the financial industry and its reputation as a hub for innovation. Located in the heart of Europe, the country is small with a multilingual culture and an open economy. Its people and companies are well-versed in international settings and have strong networks, as well as a high number of bilateral and multilateral agreements with other countries and organizations. High productivity and high-quality products and services, along with reasonable taxation and a business-friendly government, have contributed to the country’s success. Anyone starting a business in Switzerland will find a well-established ecosystem of knowledgeable professionals.
The rise of the so-called “Crypto Valley” in Switzerland can be traced back to 2013, when a group of Swiss companies known as the “trio” – Bitcoin Swiss, Monetas, and Xapo – pushed in their home country for a more favourable regulatory landscape for digital assets. Probably because of this, Ethereum decided to establish here its foundation which has opened the way for all the subsequent Swiss foundations related to layer 1 protocols such as Tezos, Cardano and Polkadot.
In 2016, Zug began accepting Bitcoin as a form of payment, marking a significant milestone for the adoption of digital currencies and demonstrating the Swiss government’s progressive attitude towards the technology.
In 2017, the valley area experienced a crypto boom, attracting many companies due to the legal and regulatory security it offered, causing many to start referring to it as “crypto valley”. This was further solidified in 2018 after the Swiss Financial Market Supervisory Authority (FINMA) introduced guidelines for the classification of tokens into three categories: payment tokens, utility tokens, and asset tokens. FINMA has been the first financial regulator to proactively intervene to create a regulatory environment that could allow token issuers to operate in compliance with applicable laws and regulations.
In 2019, the first crypto banks in the region – SEBA and Sygnum – were cleared to start operations, allowing customers to deposit digital assets directly into their bank accounts. The following year, a law was passed regarding the use of distributed ledger technology (DLT), which paved the way for the issuance and trading of security tokens. This has led to the creation of the first fully regulated security token exchange in Switzerland, Six Digital Exchange, which last year launched the first-ever digital bond. The continued growth and innovation in the Swiss crypto ecosystem are a testament to the country’s commitment to providing regulatory certainty.
Switzerland has a lot to offer blockchain companies, including access to top research institutes and universities and a large conglomeration of experts in the field. The alpine country is also a highly attractive destination for foreign investment. This is due to a number of factors, including the presence of multinational companies, a transparent legal system, the stability of the economy, tax incentives, and a wealth of funding opportunities. The latest data on the Crypto Valley Top 50 companies paints a picture of strong growth and success in the blockchain industry:
- Crypto Valley Top 50 companies have a combined value of $611.8B (December 2021)
- The valuation of the Crypto Valley Top 50 increased by 464%, from $108.4B (December 2020) to $611.8B
- The total number of firms in Crypto Valley is 1,128, an increase of 18% from 960 (December 2020)
- In Crypto Valley (Switzerland and Liechtenstein), total employment by blockchain companies increased to 6,002. This is a substantial growth of 16% from 5,184 (December 2020)
- The Top 50 companies in Crypto Valley have 1,010 employees, a change of 22% from 829 (December 2020)
- Crypto Valley now counts 14 Unicorns (i.e., projects valued at more than $1B) up from 8 at the end of 2020
- Of these there is 1 Hectocorn ($100bn+) and 3 Decacorns ($10bn+)
Overall, the business culture in Switzerland is supportive of growth and success and is characterized by a strong emphasis on quality and efficiency.
Starting a crypto company in Switzerland can provide access to a supportive ecosystem of like-minded businesses and a strong community of thought leaders. While the cost of living there may be higher than in some neighbouring countries, the benefits of setting up a crypto company there may outweigh the costs for those seeking a stable and supportive environment for their business.
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