Regulatory guidelines burden startups active in the world of blockchain technology. Especially those companies who deal with financial transactions, such as wallet services or exchanges, are often put into the same category as banks. This also means those startups have to adhere to strict regulatory and capital requirements.
Less is More in Switzerland
Though Switzerland has a dedicated “Crypto Valley” startup scene, there is no exchange platform to speak of. There are several cities housing Bitcoin ATMs, though. Zurich seems to be a hub for Bitcoin ATM activity, as six of the fourteen devices are installed in the capital city.
Various Swiss members of parliament have taken notice of this regulatory stranglehold and proposed a motion to make life a bit easier for Bitcoin-oriented startups. By reducing blockchain regulation, financial services using Bitcoin [technology] should not be classified as banks anymore. With less strict requirements in place, the cryptocurrency ecosystem can grow and innovate in Switzerland.
The motion, signed by 24 Swiss MEPs, states:
The federal council shall be instructed to define the term ‘client deposit’ from banking bill art.1 and the banking act art. 2 more narrowly, to the extent risk allows. The current broad interpretation by financial regulator Finma obstructs innovative blockchain startups whose business models get qualified as banking even in cases where the intention behind the law – namely depositor protection – would not require such a qualification.
Switzerland wants to be at the forefront of the Fintech revolution. Bitcoin and the blockchain play an integral role in the Fintech revolution. It is positive to see members of parliament in the country acknowledge the importance of these startups. Finma, the Swiss financial markets regulator, will hopefully take notice of this proposal in the next few months.
A Sign of A Global Trend?
This proposal should not be seen as a way to remove regulation of Bitcoin and blockchain in the country, though. There will still be a focus on carefully regulating these startups, while giving them room to innovate and grow. Switzerland will continue to attract blockchain startups from all over the world, and reduced regulation should help with that process.
At the time of writing, this motion had not yet been voted on by the Swiss parliament. There was no date for the vote either, although it may happen as soon as Autumn 2016. The approval or dismissal of this motion will set a new precedent for regulatory standards all over the world.
Bitcoin and blockchain have seen significant success in India so far. A growing number of users are actively using Bitcoin to pay for various bills and online shopping. There is no official regulation in India for the time being, but that does not make cryptocurrency illegal. It looks like Switzerland will go down a similar path, while maintaining some form of “regulated” ecosystem.