When you hear of the country Switzerland, the first thing that comes to mind is the low amount of taxes in the country which enables people to hide their wealth within their highly private banking system. However, there is something larger coming out of the country. The country has its eyes set on becoming the center of the cryptocurrency boom. The Swiss government has been well known to be very accepting of innovations which are fitting given the fact that the country is now embracing the presence of cryptocurrency and blockchain companies.
In fact, Switzerland is a hotspot for cryptocurrency enthusiasts to launch initial coin offerings. Some contributing factors to this highly crypto friendly economy are the fact that it has a solid banking system, low taxes, and high education rate. Having the necessary human capital to develop the ideas within the cryptocurrency space is what Switzerland excels at.
Today, a town within Switzerland is reaping the rewards of becoming the center of Switzerland’s cryptocurrency boom. The town of Zug is a region which has low corporate tax rates. As a result, several start-ups have been setting up their operations within the region. This also benefits people that live in the town because it creates job opportunities for them. If you are familiar with the cryptocurrency Ethereum, Zug is the city in which it was incorporated. To the cryptocurrency community, this region has contributed to the cryptocurrency world. As Ethereum is the second most powerful cryptocurrency in the world, we can see how Switzerland’s ecosystem has enabled the growth of a powerful cryptocurrency in the world.
Some may think that allowing cryptocurrency and blockchain start-ups to set up operations within a country may be disadvantageous due to the volatile nature of the industry. However, the opposite is true for Switzerland. The country has been able to offset the losses they made in their banking industry through the profits obtained in the cryptocurrency industry.
More cryptocurrency enthusiasts are also considering to set up their operations in Switzerland because they have a regulatory body which embraces the presence of cryptocurrencies start-ups. This is a good signal for cryptocurrencies start-ups because they can operate with the peace of mind in that jurisdiction. The regulators in the country clear huge role in enabling the growth of blockchain and cryptocurrencies.
Drawbacks for businesses in Switzerland
However, anyone who wants to set up their operations in Switzerland will have to consider the downsides of operating in this country. For instance, there is a culture of the country which will look down on any businesses that fail. This is also perpetuated by the fact that most of the society in Switzerland believe that new businesses will not succeed.
Besides, the high living costs within the country may discourage some start-ups that have limited funding. Anyone who wants to set up their operations in Switzerland will also have to consider the possibility of going against US regulators. For the past years, Switzerland has been equated to a tax haven where people actively use the country’s banking system to evade paying taxes.
For now, the US government has only announced that they will be classified cryptocurrencies as property so that they can text the transactions. However, an official announcement on how the US government will treat the cryptocurrency may reveal that they will classify cryptocurrencies differently. If this happens, it will hurt the cryptocurrency start-ups that set up their operations.
The e-franc cryptocurrency
In its efforts to launch its cryptocurrency, the Switzerland government has launched an inquiry into the possibility of making this happen. The possible name of the cryptocurrency is e-franc. Under this cryptocurrency, it will utilize the technology which is similar to Bitcoin, but it will be backed by the state. Despite the fact that cryptocurrencies have drawn much scrutiny from lawmakers around the world, Switzerland is looking to embrace it as part of their national cryptocurrency.
Sweden is also reportedly looking into issuing their cryptocurrency which will help make the payment system within their country more efficient. Despite this, these banks are taking measured steps to ensure that they protect their users against extreme volatility. No doubt, there are also questions about the long-term viability of this nationally issued cryptocurrency.
These national banks are warned to think hard about the potential risks when issuing their cryptocurrencies. There will be major hurdles which exist in the form of legal and monetary form when issuing a nationally back cryptocurrency. Therefore, there needs to be more research done on the potential risks and opportunities of issuing a national cryptocurrency.