Crypto Valley’s birthplace — a hub of crypto companies — being a canton of Switzerland is not random. For example, the small European country’s characteristics, such as its groundbreaking propensity and friendly and pioneering legislation, make it especially attractive to companies in the sector.
With an eye on bringing its companies to the world and attracting business to Switzerland, the country has created an official agency to facilitate this process. The Swiss Business Hubs are spread around the world, and one of them is in Brazil.
Bruno Aloi, deputy head of the Swiss Business Hub Brazil, explains that Switzerland has always wanted to attract trade and banking services due to its size and small population. Therefore, the country has a tradition in the financial sector, but it also closely monitors innovations.
So, Aloi notes, in 2012, when the end of bank secrecy in the country was approved, Switzerland saw in new financial technologies — bitcoin had emerged just three years earlier — the opportunity to reinvent itself.
“They embraced the issue of financial technology, blockchain, cryptocurrencies. From this, they created a whole new industry and today they are a world reference in this”, he points out.
Thus, before there was a specific regulation for crypto, the government created standards. This “gave a certain legal certainty and began to attract companies to settle there. Also counting on the whole Swiss tradition of stability and security”, he explains. Security is precisely what these companies were looking for.
The first to embrace this market was Zug’s canton, which began to accept the payment of taxes in bitcoin. Finma (financial market regulator in Switzerland) created a regulation that did not exist anywhere in the world.
In such a scenario emerged the Crypto Valley, which today already goes beyond the Swiss borders and includes areas of neighboring Liechtenstein. A CVVC report pointed out that there were 919 blockchain companies in the first Crypto Valley in the first half of 2020. The attraction of companies is explained, mainly for three reasons, says Aloi. The first is business-friendly legislation.
“The regulator in Switzerland is not there to get in the way of the company. And all regulation is done with the participation of people working in the market”, he says. “Of course, the government and regulators will make sure that the laws are enforceable and that there will be no money laundering or illicit activities. But they will not make it an impediment to business activity”, he adds. And that gives regulatory security, he says.
In Switzerland, authorities engage in dialogue with companies
Also, he highlights the constant conversation between regulators and businesses. According to him, when companies are out of the rules, the authorities’ tendency is to dialogue and seek adequacy. As a third factor, he lists Switzerland’s focus on innovation. No wonder the country occupies the top of the Global Innovation Index for the 10th year in a row, which values the innovation indexes of 131 nations.
Another positive factor in Swiss crypto regulation is its technological neutrality, Aloi explains.
“Switzerland has not created any specific laws for blockchain and cryptoassets. It took the laws that already existed and gave guidance. So the law is based on general principles and not on a specific technology. That’s why the country was rapid to adapt to innovations”.
According to Aloi, there was a boom in Brazilian companies seeking the Swiss Business Hub Brazil to settle in Switzerland between 2017 and 2020. Now, however, he believes that the trend is stability. Thus, the hub’s role is to advise the company on settling in Switzerland. Therefore, it operates from the evaluation of the project to the bridge with the interested cantons.