Switzerland demands to become a “Crypto Nation”, however it is facing an issue. Most of the blockchain startups haven’t been allowed to use traditional banking services because Swiss banks reject to operate accounts for them, referring to strict anti-money laundering rules and processes which are related to managing clients.
Regardless of this, the things can change because of Swiss policymaker promise that crypto startups will have full access to banking services from the next month. As per details, Swiss Finance Ministry is jointly working with Swiss Bankers Association (SBA) in order to resolve this issue for the development of the industry.
What’s the main issue?
Zug, which is a small lakeside town near Zurich, is the main powerhouse of more than 200 startups. Due to this, Switzerland has been ranked 2nd after the US, in terms of the amount of money acquired by Initial Coin Offerings (ICOs). With the help of Cryptocurrency, the Swiss ICOs have earned $1.46 billion in 2017, however, banks don’t want to make any connection with this industry, because it is susceptible to hacker attacks and scams.
Traditional Swiss bankers don’t want to get involved in any of the dark and fraudulent crypto worlds. They are highly worried about the privacy and secrecy feature of the Bitcoin and other cryptocurrencies which allow money laundering and some unauthorized financial activities.
As the crypto companies are unable to access the banking services, it has aroused a serious problem for the industry. Moreover, there are various ways where you can spend coins but still, they are not completely accepted as the fiat currency. It is probably uncertain for startups to cash out funds obtained from ICOs and utilize them in their business.
Heinz Tännler, who is the financial director of Zug canton, said he believes that Swiss politicians and regulators will soon eliminate obstacles in the next few months, thus crypto startups will work effectively with the banks similarly the way with other firms.
“We anticipate clarifying relationships by the end of the year at least,” said Zug Canton. Time is moving fast, so authorities like Malta and Singapore are working very hard to attract these companies. The scarcity to access banking facilities is very harmful in the current scenario.
Crypto startups are trying new ways to reach out, reaching to banks in Liechtenstein and other banking services or developing third-party relationships. For instance, Coinlab has made collaboration with TokenPay, a Blockchain payment system located in the British Virgin Islands.
As per Guido Schmitz-Krummacher, a blockchain expert and a former director of the Tezos foundation said that by not allowing crypto startups access to bank account, they are losing a golden opportunity of business.
Regulators are ready for help
By keeping in mind the crucial approach accepted by global financial regulators, Switzerland wishes to stand out of crowd and support the crypto industry. For this, the finance minister has made a workforce with Swiss Bankers Association (SBA), the central bank to provide the solution.
SBI asks to build set of rules as well as standards which are attached to the ICO-funded startups which will simplify the account opening process and reduce the banking risks concerned with money laundering.
Heinz Tännler said, “Of course, rules on money laundering and other rules must be attached to by blockchain companies. I can realize that banks are careful with respect to ‘know your client’ and anti-money laundering. But experts reckon the danger of money laundering is lower than in other sectors of the finance industry.”
He also said that the companies which are currently working under blockchain should receive all the banking services similar to other firms. By this, they will stop requesting to firms in other countries like Liechtenstein.