Hundreds of crypto startups have been stranded within the borders of Switzerland amid this COVID-19 pandemic. This comes due to a combination of investors pulling out and their own economic strain amid this crisis. The crisis has only deepened after Switzerland’s government refused a bailout to the local blockchain industry, worth 100 million CHF, or approximately $103 million.
Zug’s Liquidity Crisis Denied Aid
Heinz Taennler, the Zug Finance Director, has been in talks with Switzerland’s central government to set up an emergency fund. This fund would be used to support the various crypto firms within the country’s “crypto valley” near Zurich, which have been devastated due to the Coronavirus pandemic sweeping the world.
Zug’s local government has opted to block potential emergency funding into the once-flourishing industry, leaving the blockchain industry to fend for themselves as private investors summarily pull out of the space. While talks have started and gone on since April this year, it has effectively broken down last week, which puts over 160 firms at risk of imminent bankruptcy. This was revealed due to a recent survey done by the Swiss Blockchain Federation.
Hopes Of Bridging Credit Facilities Filling The Gap
With any luck, bridging credit facilities will be capable of providing companies within the small Swiss canton of Zug with enough liquidity to cover their overheads. With any luck, this will be capable of combating the turnover reductions that the COVID-19 pandemic had caused.
Switzerland stands as one of a few countries that have taken a more active role when it comes to creating and adjusting its legislation to incorporate crypto projects within it. Swiss authorities have always been eager to maintain Switzerland’s position as one of the leaders in the cryptocurrency pace, all the while playing catch-up to its landscape changing by the day.
Prioritizing Crypto Until Now
Back in 2018, FINMA had issued out its first asset management license. This license was given to a Zug-headquartered company, Crypto Fund, which is a crypto investment fund. Besides its name being as on the nose as possible, it offered its services to various institutional clients. In 2019, Dukascopy became the first bank within Switzerland to win the appropriate permissions to launch an ICO, having been approved by the Swiss financial market supervisor.
Since then, there’s been a line forming at the regulator’s door, as each competitor tries to enter the Swiss crypto space and get its services approved in the country. Under the new regulations of FINMA, however, crypto companies must now apply for licenses in order to handle more than 100 million Swiss Francs within public deposits.