Blockchain: The industry is concerned about the attractiveness of Switzerland

Yulgan Lira readily admits “being in the middle of the storm”. Came from Brazil to launch the stablecoin of his company Colb in Geneva, he invested part of the 3 million raised by the project, confident in the security of the Swiss legal framework. He was taken by surprise by the FINMA position published in July 2024, requiring issuers to stablecoins systematic identity checks at all levels of transactions. For Yulgan Lira, “such a limitation on transferability prevents us from being competitive on the global market.” The entrepreneur says he is studying all possible recourses and “fighting to continue to exist in Switzerland”.

Industry tension against FINMA

He is not the only one to be moved by the situation. The country’s two national associations – the Swiss Blockchain Federation and the Crypto Valley Association – have expressed their deep disagreement with a rule the consequence of which would be the practical impossibility of launching stablecoins centralized from Switzerland, due to lack of a “viable economic model”. The risk is emerging of seeing a section of the industry leave the country and issue from Europe, with the possibility in return of distributing the tokens in Switzerland “without any restrictions”.

The episode is reminiscent of that of 2023, when FINMA decided to limit the activity of staking to banking establishments. As in the case of stablecoinsassociative circles deplored not having been consulted beforehand, and denounced the direct threat to the Swiss blockchain industry. The regulator then made an about-face. That same year, the founder of Nym, Alexis Roussel, filed a complaint against FINMA’s decision to lower the amount of exchange in cryptocurrencies to 1,000 francs per month without identity verification, deemed discriminatory in relation to the rules applied to cash.

This regulatory tightening worries the founder of Mt CapeArnaud Salomon, for whom “the reduction to 1000 francs per month is an obstacle to activity, just like the limitations on stablecoins“. He abandoned his plan to take over the stablecoin XCHF from Bitcoin Suisse, which actually announced its end in 2024. “The law does not change, it is the interpretation of FINMA which changes and creates instability. This clearly raises the question of whether there is a future in Switzerland.”

All for the banks?

For lawyer Gabriel Jaccard, founder of the Geneva association The Good Token Societythe positions of FINMA, in particular that on stablecoins, “favor banks which basicly identify all their customers and are by nature compatible with these requirements, however unjustified”. And to note that “some of them, like PostFinance, are also preparing their own stablecoin».

Her colleague Biba Homsy admits that banks are listened to by the regulator, “given the density and precocity of their commitment to crypto”. However, she notes the importance of a constructive dialogue with smaller financial intermediaries, “essential in particular in innovation”.

“FINMA’s recent positions favor banks, which are by nature compatible with these unjustified requirements.”

Gabriel Jaccard, co-founder of The Good Token Society

The call of Europe

Very different climate in the European Union, where 2024 marks the gradual entry into force of MiCA regulation on cryptoassets. “The European framework is not particularly favorable, but it is firm,” notes Gabriel Jaccard, for whom legal uncertainty has changed sides. Among the key points of MiCA, the obligation to obtain European approval as a cryptoasset service provider to freely approach European customers. Swiss companies are taking the plunge, like Zurich App Relayflagship bitcoin savings application, which has 80% European customers and opens its Paris office with five employees. In particular, the game will continue to be available on the App Store in the EU.

Despite the heaviness of MiCA, the appeal of a unified European market is convincing. The giant Circle was thus the first to obtain the European license, allowing the issue of stablecoins from July in Paris. Lawyer Biba Homsy pleads for “the adoption of proportionate rules in Switzerland if we want to remain competitive internationally in the face of a market of 450 million consumers”.

On this subject, his colleague Gabriel Jaccard deplores a Swiss arsenal that is not always well calibrated, illustrated by the launch in 2021 of the DLT trading license, “which costs several hundred thousand francs for a market of 9 million people, and that no company has been searched in three years of existence.

Return to the political agenda

On the German-speaking side, the concern is shared. For Luzius Meisser – member of the board de Bitcoin Switzerland – the political tide has turned since the end of the 2010s, when Switzerland positioned itself internationally with a clear and early legal framework, particularly on ICOs and the qualification of tokens. “With Ueli Maurer, Johann Schneider-Ammann and Mark Branson, we had three key figures who recognized the potential of crypto for the Swiss financial center.”

Despite their successive departures, an adaptation of the law in response to MiCA could be on the 2025 agenda. “For the industry, it is an opportunity to catch up, or even surpass the European Union again,” hopes Luzius Meisser, who warns: “To be competitive, the Swiss framework will have to be more attractive than the European one, because Switzerland does not have the argument of market size.”

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Joan Plancade is an economic and investigative journalist for Bilan, a critical observer of the Swiss and international tech scene. He is interested in fundamental trends that are reshaping the economy and society. More info

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