Switzerland Rejects Bailout for Crypto Companies Affected by the Pandemic

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The world was and (to a degree) still is in turmoil following the COVID-19 pandemic. Small and medium-sized businesses are especially affected after they’ve seen reduced or closed production in the past few months. Many governments have rushed in to save them by offering loans and special packages to keep them standing upright. Switzerland is one of the countries that did so, yet apparently this doesn’t apply to crypto companies that deal with Bitcoin and altcoins.

A recent $103 million bailout for crypto companies was rejected by the Swiss government. The funding package was requested by Zug and the money was supposed to be shared with local fintech startups. As the government already prepared a package for startups, it declined Zug’s request.

The Crypto Valley Left in the Dust

Zug is Switzerland’s center of the crypto industry and is known as “Crypto Valley”. Heinz Taennler, its finance director, recently asked the government for help in order to help fintech startups survive the coronavirus COVID-19 pandemic. And while everyone was expecting good news, the Crypto Valley got the most negative answer.

Zug’s local government declined the request citing another credit facility for blockchain startups issued before. To make things worse, Taennler’s funding request was the only one that was turned down from a total of 24 applications. It’s clear that the Swiss government is not high on the idea of cryptocurrencies. Interestingly, most government officials were reported to be not that sold on Bitcoin and cryptos in general.

Following several withdrawals of private equity investors, the Swiss cryptocurrency industry is not in tatters. It was once one of the most promising in the world, but in no thanks to the government, the COVID-19 coronavirus may lay it to rest.

On the positive side of things, Taennler managed to secure a $15.4 million loan facility just a few days ago. It should help some emerging businesses in the Crypto Valley survive, but it’s only temporary relief. According to a recent report, over 66% of crypto and blockchain companies failed to secure financial relief in the past few months.

Many of these companies won’t survive by the end of the year. Since private equity investors are withdrawing their funds and with global economic uncertainty all over the globe, the Valley’s crypto economic system is in serious trouble. Many experts have seen the latest government bailout decline as the final nail in the coffin for the famed Crypto Valley.

JP Morgan Says Bitcoin Is on the Rise

The Swiss government’s reluctance to help the crypto industry is a real shame considering that powerful financial institutions such as JP Morgan are expecting Bitcoin to hit new heights. Although the bank doesn’t deal with cryptocurrencies, it avidly follows the crypto market.

A recent report from JP Morgan analysts found that the leading cryptocurrency is trading around 25% of its intrinsic price after the halving. In layman’s terms, the price could go up soon. If JP Morgan’s analysts are correct, the intrinsic value of Bitcoin is somewhere in the $11,500 area.

 

 

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May 27, 2020: • No Comments

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