Swiss Government Makes Moves to Regulate Bitcoin

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bitcoin imageAlthough the Swiss railway service was quick to recognize bitcoins, the government of Switzerland is taking its own time when it comes to regulating fintech and digital currencies such as Bitcoin.

A few days after SBB, the Swiss railway operator, decided to sell bitcoins through its ticket kiosk network, the Federal Department of Finance (FDF) of Switzerland made rough plans to regulate fintech.

The government plans to license fintech companies in particular. There is also a proposal to make the Financial Market Supervisory Authority the primary regulatory for Swiss fintech companies.

Bitcoin to be Researched

The FDF has also stated it will research all digital currencies such as Bitcoin, along with the various ways in which blockchain technology can be used. The agency stated, “… the FDF should conduct additional clarifications in cooperation with the interested authorities on reducing further barriers to market entry for fintech firms, also those outside financial market law (e.g. legal treatment of virtual currencies and assets).”

Ueli Maurer, the finance minister of Switzerland, said at a press conference that the proposed laws would attract more companies despite the fact that Switzerland already has a few blockchain startups. Reuters quotes him as saying, “We assume that with the steps we have prepared and the commitment we have to the overall financial services industry we can provide a solution that puts us among the top (countries) in the world that regulate this.”

Crypto Valley Attracts Blockchain Startups

Switzerland has a small province called Crypto Valley, stretching for a distance of 30 kilometers between Zurich and Zug. It features competitive recruitment, progressive laws, and low taxes, owing to which startups that want a place to grow in the midst of uncertain global laws get attracted to it.

While China, Russia, and US have either uncertain or strict regulations for digital currencies, Switzerland has been extremely lenient. As a result of this leniency, Crypto Valley is the home of startups and blockchain projects.

Tedious Licensing Discourages Companies in New York

While Switzerland is well on the way to becoming an international bitcoin hub, New York is taking the back seat. Although the financial regulator in New York had implemented excellent digital currency laws last year, its licensing procedures are now in limbo and its rivals have not only caught up with it, but also raced ahead of it.

As the results of the laws passed two years back, digital currency companies have to first obtain a BitLicense to do business in New York. This license enables companies to maintain funds collected from customers and exchange bitcoins into dollars and other fiat currencies.

Benjamin Lawsky, who was the chief of the Department of Financial Services (DFS) at that time, was one of the earliest advocates of digital currencies. Although it is too early to say if bitcoins will ever receive mainstream acceptance, it is definitely true that cryptocurrencies form part of a fast-growing industry that combines technology with finance.

Owing to slow licensing procedures, the DFS has only licensed two BitLicenses and is yet to process 15 more applications.

November 6, 2016: • No Comments

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