Heinz Tännler, President of the Swiss Blockchain Federation, Government Councillor and Finance Director of the Canton of Zug, explains why Switzerland has become one of the world’s leading locations for blockchain companies
In recent years, Switzerland has become one of the world’s leading locations for blockchain companies, enabling a variety of business models to be explored here. Crypto Valley, between Zurich and Zug, is home to numerous companies and organisations in the blockchain sector. Start-ups come to Switzerland primarily because of legal certainty, Switzerland’s world-class infrastructure, and the Valley’s increasingly strong ecosystem.
Moreover, the willingness of political decision-makers to maintain and enhance Switzerland’s attractiveness for new technologies and companies, as well as the Valley’s proximity to universities has also contributed to the expansion of the sector in Switzerland.
An example of this dynamism is the establishment of the “Swiss Blockchain Federation” last October, a public-private partnership for the strengthening of blockchain technology in Switzerland. The publication of the Federal Council’s report on the optimisation of the legal basis for distributed ledger technology and blockchain in Switzerland at the end of 2018 also provided an important impetus.
Legal certainty is of great importance
Companies are in need of legal certainty, as transactions and business activities based on blockchain technology cannot always be clearly supported by the existing legislation. In order to ensure the breakthrough of the blockchain technology and the success of the companies involved, it is critical that business operate on a long-term, secure legal basis.
The publication of the report by the Federal Council marks an important step in this direction and provides a detailed survey of the legal challenges that these new business models create. The report does not call for a separate blockchain law, preferring to amend existing civil and financial market law. This reflects the objective of setting the framework conditions necessary so that Switzerland can strengthen and extend its leading position in blockchain.
Switzerland is taking a pragmatic approach, which is in line with proven Swiss principles and is to be welcomed. The Federal Council report must now be quickly followed by its legislative implementation because Switzerland needs this certainty for the basis for further development. A 10-point programme launched recently by the Swiss Blockchain Federation to strengthen blockchain technology in Switzerland also calls for a binding agenda from the regulator. The programme spells out the social policy, regulatory, and public interest issues that need to be settled if Switzerland is to be a successful blockchain location.
Excellent starting position
In comparison to other countries on the international stage, Switzerland has “excellent cards because it has good prerequisites as well as entrepreneurs, developers, scientists and doers,” said the Swiss Finance Minister Ueli Maurer on 3 December 2018 at the opening of the “Infrachain”, the first blockchain conference for the public sector and infrastructure companies in Bern, the Swiss capital.
“Blockchain applications will explode in the next few years, and Switzerland is one of the leading developers of blockchain technology and its applications,” Maurer added. This should encourage start-ups to set up their business in Switzerland.
The number of blockchain companies in Crypto Valley is growing rapidly. In December 2018, over 750 companies with over 3300 employees in Switzerland were registered on CV Maps, an online directory of the Blockchain industry. Numerous sub-sectors of the blockchain industry are represented in Crypto Valley, from HealthTech to data analytics to e-government. The 50 largest blockchain companies had a market capitalisation of around $20 billion as at the end of December 2018.
Public administrations are also using blockchain in Switzerland: The canton of Geneva is testing electronic identification and the use of digital signatures for its commercial register. Schaffhausen operates an e-government platform on blockchain in collaboration with a start-up company.
Too important not to be used
In a World Economic Forum analysis, six sources of value creation through blockchain have been identified: the simplification of internal operating procedures, more efficient interaction between regulators and supervised financial firms, the reduction of counterparty risks in transactions, time savings in the handling of financial transactions, better use of a company’s equity or liquid assets, and a greatly reduced risk of fraud. The Internet has changed the way we communicate, and blockchain is changing the way we trust each other.
The still young technology with its countless application opportunities will shape our future and is indispensable. Switzerland is determined to play a leading role as a location for successful companies.
President of the Swiss Blockchain Federation
Government Councillor and Finance Director of the Canton of Zug
Tel: +41 41 728 36 01