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Switzerland is one of the most crypto-friendly countries and has a very progressive and positive attitude towards cryptocurrency. The country sees an opportunity to become a global leader in the cryptocurrency sector, with forward-thinking policies and welcoming new developments.
In Switzerland, the Swiss Federal Tax Administration (SFTA) classifies cryptocurrency as an asset or property; this makes cryptocurrency subject to wealth, income, and capital gains taxes in addition to being declared on annual Swiss tax returns.
The Swiss Financial Market Supervisory Authority (FINMA) is Switzerland’s financial regulatory authority. Cryptocurrency exchanges are legal in Switzerland, so long as the exchange has obtained a license from FINMA to operate – and are therefore also regulated by FINMA.
In 2020, the Blockchain Act was passed, which further defined the legalities of exchanging cryptocurrency and running cryptocurrency exchanges in Swiss Law. The act outlines that when a token is eligible to be transferred to the blockchain infrastructure, it must be in compliance with local Initial Coin Offering (ICO), Anti-Money Laundering (AML), and Combatting the Financing of Terrorism (CFT) requirements.
In 2019, in an effort to expand and support the wider blockchain infrastructure, FINMA granted licenses to two Zurich-based financial institutions – Maerki Baumann and Incore Bank – to offer digital asset services as well as carry out cryptocurrency trading and custody activities. In addition to providing business bank accounts to crypto and blockchain companies, these banks have also been assisting in initial coin offerings (ICOs) and security token offerings (STOs) for its clients. These efforts were further embraced with the passing of the Blockchain Act in 2020, granting two more financial institutions with cryptocurrency licenses – SEBA and Sygnum.
Multiple Swiss cities have already initiated the integration of cryptocurrency-based payment methods into their cities in an effort to promote green financing and lead a progressive future. For example, in 2016, at the heart of Crypto Valley, the Canton of Zug introduced Bitcoin as a way of paying city fees, and in 2021, the Canton of Zug announced the ability to use Bitcoin and Ether to pay taxes. Both companies and private individuals are able to pay up to an amount of CHF 100,000 via cryptocurrency, but partial payments are not accepted. Following this, several municipalities have implemented this possibility.
In order to be offered tax settlement via cryptocurrencies, the Zug Department of Finance has partnered with Bitcoin Suisse, a Zug based Swiss financial intermediary. After an individual contacts the cantonal tax office, that individual will be provided a QR code for payment via email. To eliminate the volatility of crypto exchange rates with this new method of payment, Finance Director Heinz Tännler has stated that amounts will always be received in Swiss Francs, even if the payment is made in Bitcoin or Ether.
In March 2022, another Swiss city, Lugano, announced a plan to make three cryptocurrencies: Bitcoin, Tether, and Lugano’s own LVGA Points token “de facto” legal tender. Lugano has partnered with Tether, a stablecoin issuer, to push this initiative through. The city has been extremely financially progressive and is pushing to become the Bitcoin capital of the world. Lugano has already implemented blockchain-based solutions such as the MyLugano app and its LVGA Points token, the Lugano digital franc, and the 3Achain blockchain infrastructure.
Based out of Switzerland, Crypto Valley is the largest blockchain ecosystem in the world.
Thanks to the welcoming Swiss crypto laws, as of 2021, there are over 900 blockchain and cryptocurrency businesses based in Switzerland. Here are a few noteworthy ones:
As mentioned aboe, Bitcoin Suisse is a Swiss regulated Swiss financial intermediary. Bitcoin Suisse provides trading, prime brokerage, custody, lending, staking, and other crypto-financial services for private and institutional clients. The firm has also announced on April 20, 2022 that it will offer the Liquity protocol in addition to its decentralized finance (DeFi) services. Launched in April 2021, Liquity is a DeFi borrowing protocol that allows users to put up Ethereum collateral into its smart contracts and borrow LUSD stablecoin with a 0% interest rate.
With headquarters in Geneva, Switzerland, Solana was launched in March 2020 by the Sola-na Foundation, and is a high-performance open-source blockchain that is designed to facilitate decentratized app (DApp) creation. It is one of the leading blockchains for NFTs. OpenSea announced on March 29, 2022 that they would begin supporting Solana NFTs on their platform in April.
Based in Zug, Switzerland, Ethereum is a decentralized, open-source blockchain that runs smart contract functionality. Smart contracts are applications that are programmed to run exactly as programmed, without the possibility of third-party interference, hacking, fraud, or censorship. Ether (ETH) is the cryptocurrency generated by the Ethereum protocol and acts as a proof-of-work system for adding more blocks to the blockchain.
Based in Crypto Valley, Tezos is a self-upgradable and energy-efficient Proof of Stake blockchain. In 2021, Tezos recorded over 50 million transactions with a carbon footprint of only 17 individuals. One of Tezo’s unique elements is its governance. While a majority of early blockchains rely on its development teams to make decisions, Tezos is backed by its community, and governance is based on participation. As of April 21, 2022, the current price of Tezos is $2.04 with a volume of $85.4 million.
Switzerland is one of the most progressive and welcoming countries for cryptocurrency and blockchain companies. In addition to being the host of Crypto Valley companies, Swiss cities have taken their own initiatives to provide opportunities – and encourage – their citizens to use cryptocurrency. As one of the most prosperous banking and financial centers of the world, the future of cryptocurrency is bright and promising in Switzerland.
Elizabeth Sun is a contributor to Identity Review from the University of Southern California.
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