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Bitcoin, Blockchain and Co.: Politics is betting on the boom in the Crypto Valley. The Federal Council wants to improve the framework conditions for Blockchain in Switzerland. The offensive was launched by a Zug government council and a heavyweight from the PR industry.

Until recently, blockchain and crypto currencies were foreign worlds for most players in federal Berne. On Friday, Federal Councillor Ueli Maurer spoke to journalists about blockchain and distributed ledger technology, as if he were moving daily in the Fintech startup scene. With his committed appearance, the Finance Minister made it clear that there is a lot at stake for Switzerland: “We are one of the world’s leading locations. We want to maintain this lead by defining the framework conditions for the industry.”

Pressure from the Canton of Zug

Switzerland is taking a different path than most of its European competitors. Unlike Liechtenstein, Malta and Luxembourg, Switzerland does not enact a blockchain law, but wants to integrate the new technology into existing legislation. Maurer expects an advantage from this pragmatic approach, because a new blockchain law would slow down innovations. The adjustments in civil law, bankruptcy law and financial market law should not be too excessive.

The Bitcoin falls and falls – everything important about crypto currencies at a glance

Until the federal administration deepened and intensively dealt with this complex matter, however, pressure from outside was needed. The decisive impetus for this came from the Canton of Zug, which has been a worldwide attraction for the fintech industry for several years under the name of Krypto-Valley. In the meantime, start-ups from all over the world are pilgrimaging to the Blockchain Mecca on Lake Zug, where not only talented programmers have long since moved in, but a whole scene of specialised lawyers and financial service providers has emerged.

Local politicians were quick to discover the appeal of this technology and the associated applications such as crypto currencies. In May 2016, the city of Zug was the first government agency in the world to accept crypto currencies such as Bitcoin as a means of payment. The advertising effect achieved by the city through international media reports is estimated at around 20 million Swiss francs. Zug’s finance director Heinz Tännler developed into the actual driving force on the political stage. He succeeded in luring the Federal Councillors Johann Schneider-Ammann and Ueli Maurer to Zug for various blockchain events and to awaken their fascination for this matter. Sometimes the fascination turns into euphoria.

Now it is not the case that Tännler – after all former SVP Federal Council candidate – does not have a good connection to Bern. But a partner with a good network in Berne is always helpful. Lorenz Furrer, co-founder of the PR agency Furrerhugi, and Tännler quickly founded the Swiss Blockchain Task Force and won Schneider-Ammann and Maurer as godfathers for their association. This task force then gently but firmly told the Swiss Confederation what was to be written in the new regulations and what was not.

The importance of Zug for the Confederation in terms of Blockchain is shown by the fact that on Friday before Ueli Maurer’s media conference in the Crypto Valley Labs in the city of Zug a seminar for interested specialist journalists took place. The seminar was led by none other than Jörg Gasser, State Secretary for International Financial Matters. At Dammstrasse 16, where the event took place, there is also Narwal Blockchain PR, an offshoot of Furrerhugi, which offers tailor-made products for the booming industry. So it was a matter of course that both Lorenz Furrer and Heinz Tännler took part in the media seminar, actively accompanied the journalists and thanked the federal financial experts for their excellent cooperation.

First dampers

After initial skepticism, the enthusiasm for Blockchain is currently overflowing. Ueli Maurer compared the current founding fever with the times when the Internet was still young. But in the blockchain Mecca of Zug, the first setbacks have been recorded. The turmoil surrounding the start-up companies Tezos and Envion has left its mark. The two initial coin-offerings led to disagreements and quarrels between the parties involved, leaving many investors disappointed. It will be a while before the shards are putty again and the claims of all parties have been clarified.

“Such scandals are and will remain a reputational risk that Canton Zug cannot assess,” says Andreas Hürlimann, who sits on the Zug Cantonal Council for “Alternative – the Greens”. The politician points out that Zug “pulled out a shoe” when the dotcom bubble burst. At the moment there are many promises in the air, of which it is unclear whether they will actually be fulfilled. According to Hürlimann, only the coming years will show what added value Blockchain technology can create at all.

Asked that the settlement of such companies was not only associated with opportunities, but also with risks, Maurer explained that the more than one hundred crypto currencies created in Switzerland were indeed associated with speculation and knights of fortune. However, the Finance Minister is convinced that clear rules, such as the Money Laundering Act, will help to get these excesses under control. “I don’t know whether cases like Tezos and Envion could have been prevented with the new regulations. But we are now determining what will happen if the rules are not observed,” Maurer stressed.

About Switzerland

Switzerland (French-speaking Switzerland, Italian Svizzera, Romansh Svizra, Latin Helvetia), officially Swiss Confederation (French-speaking Switzerland), officially Swiss Confederation (French-speaking Switzerland). Confédération suisse, Ital. Confederazione Svizzera, rätoroman. Confederaziun svizra, lat. Confoederatio Helvetica), is a landlocked country in Central Europe. The country borders north on Germany, east on Liechtenstein and Austria, south on Italy and west on France.

The Confederation has existed as a loose confederation of states since the 13th century; according to a national myth, it was founded on 1 August 1291 on the Rütli meadow. Switzerland in its present form as a federal state was created by the Federal Constitution of 1848. Since 1979 it has been divided into 26 cantons (member states).

Switzerland’s neutrality in foreign policy has been recognised under international law since the Congress of Vienna in 1815. Today the country is a member of EFTA, the Council of Europe, the World Trade Organisation (since 1995, or since 1959 the predecessor organisation GATT), the UN (since 2002), but not the European Union. Switzerland is one of the economically strongest countries in the world. Three-quarters of the working population work in the service sector.

Climate

The Alps of Switzerland act as a climate divide between the cool moderate climate in the north and the Mediterranean climate in the south. The snow line lies between 2.500m and 3.300m in the central part of the Alps. The foehn is of great regional importance. In Zurich the average January temperatures are -1°C, the July temperatures 18°C. Rainfall is 74mm in January and 143mm in July.