Switzerland: How and Why It Has Become the Cryptoworld Leader?
Switzerland has become the most popular place for locating the blockchain-based business right after the Ethereum sale in 2014. Also, according to CoinDesk ICO Tracker, the amount of overall ICO investments of the first half of 2017 has been over $1 billion, with $370 from it gathered by Swiss companies.
What makes Switzerland so popular? First, the country has comparatively low taxes, well-developed bank infrastructure, progressive confidentiality maintenance and a positive look at cryptocurrencies among the population.
Moreover, in Swiss Zug, there is a Crypto Valley Association — organization aiming at building the best blockchain ecosystem in the world. It is a place of hundreds of fintech and DLT-based startups, including Ethereum, ShapeShift, Xapo, Status and Cosmos Network.
The situation with regulations is positive as well. Let’s investigate the legal regulatory framework and see what other advantages attract entrepreneurs to Switzerland.
Cryptocurrency and ICO regulations
According to the Swiss Federal Council’s report, Bitcoin and other digital coins are not securities or derivatives – they are treated as assets. As for crypto tokens, they can be taken as securities or assets depending on their characteristics.
The country does not have specific rules on how to conduct token sales, however, it requires KYC and AML policies compliance, and provides recommendations for ICO launch. Swiss Financial Market Supervisory Authority divides ICOs into payment, utility and asset ones and offers specific advice for each of them.
Cryptocurrency business regulations
Digital coins usage as a means of payment does not require any license but the one is needed to be obtained by trading platforms. FINMA has stated that any crypto exchange has to receive a license to be directly subordinated financial intermediary or has to become a member of self-regulated organization.
All LLC companies are required to have 20 thousand CHF (around $21,5 thousand) as a starting capital. The amount of capital companies can gather during token sales is clearly defined as well – no more than 1 million CHF (around $1,000,071). If an organization wants to acquire more investments, it has to get additional license.
As crypto coins are treated as assets, they fall under the same taxation system, according to the Swiss Federal Income Tax Act. An income tax is defined as 7,83% for federal tax and 1%-26% for cantonal one.
As for VAT, European Court of Justice states that for this purpose, Bitcoin is treated as a currency meaning that cryptocurrency operations do not fall under VAT.
What do crypto experts say about Switzerland?
CoreDev at Wings Stas Oskin explained the current difficulties and stated that opening bank account for blockchain-based business is currently quite a complicated process. More than that, the expert emphasized that Zug has several hundreds unprofitable organizations registered. However, he sees Zug’s Crypto Valley as a great ecosystem in general.
Benedict Schuppli, the Chief Legal Officer at Lykke shared his opinion about Swiss crypto atmosphere explaining why Lykke has chosen this country as a destination, “Switzerland is one of the leading crypto hubs in the world as the regulators don’t prevent promising technologies from development; they are trying to help new projects to emerge.”
The main advantage of establishing a crypto business in Switzerland is the welcoming attitude towards blockchain of both the government and community. Although the registration of business has become quite complicated, significantly low taxes and high trust of investors let companies get enough capital via ICOs and continue to attract crypto enthusiasts into the country.