Switzerland Progressing Towards a Decentralized Economy!
Switzerland has been dipping its toes into cryptocurrency, with major Swiss banks like Sygnum beginning to offer services related to digital currencies. It has also considered experimenting with a CBDC project along with the BIS and National Bank of France.
When did Switzerland begin to accept cryptocurrencies?
The “Blockchain Act” passed in September 2020 by the House of Representatives helped in paving a path for many banks and firms to offer cryptocurrencies as tradeable assets. These laws also addressed company bankruptcy to securities trading, along with setting a concrete foundation for many blockchain-based companies and Exchanges to flourish.
Banks like Sygnum and SEBA Crypto AG were already ahead of the curve, precisely a whole year ahead of the Blockchain Act when it came to promoting trading with cryptocurrencies thanks to The Swiss Financial Market Supervisory Authority (FINMA). FINMA has been tasked with protecting investors, creditors, and policyholders in addition to regulating financial markets and making sure they function properly. It provided banking and securities dealer licenses to both of these banks to help them deliver digital assets to traditional markets.
The DLT amendment developed more in February as Switzerland acknowledged tokenized securities on the same plain as traditional stocks. This benefitted investors greatly as they were able to acquire legal ownership via the blockchain, eliminating any and all tedious processes involved. Not just Crypto banks but also stock exchanges like SIX profited from this as it bridged the gap between regulated and deregulated institutions.
Is there a Possibility of a CBDC in the future!
CBDCs are gaining more attention as countries all around the world are exploring the possibility of a currency that is backed and regulated by a country but available in a digital format.
The Bank of France and the Swiss National Bank have joined forces with the Bank for International Settlements to work on a project involving CBDCs. According to PYMNTS.com, “Project Jura” will involve the exchange of the financial instrument against a euro wholesale through a delivery versus payment settlement mechanism and the exchange of a euro wholesale CBDC against a Swiss franc wholesale CBDC via a payment versus payment settlement mechanism. Although this does not hint at any future CBDC according to the two banks, it will certainly improve transaction efficiency and security. This still displays the interest of countries to participate with other neighboring countries and create cross-border settlements.
Many have argued whether Switzerland requires a CBDC that is regulated by the central bank. Although there is a decent point over how a digital currency can serve the country and improve financial inclusion. The Swiss National Bank’s chief economist Carlos Lenz thinks otherwise. Carlos disagrees with the notion that blockchain can be of any use when it comes to a CBDC. This is quite odd as a digital currency can be verified and regulated only with blockchain technology, and it does a pretty good job while at it. Nonetheless, if the bank is confident in its existing payment system and chooses not to implement such technology, then the decision makes sense.
Major Banks offering crypto-trading services!
In the past few months, many Swiss banks have upped their crypto services like SEBA, which added 3 more DeFi tokens to its repertoire of digital currencies like Bitcoin, Bitcoin Cash, Ethereum, and Ripple, to name a few, along with some fiat currencies. These DeFi tokens belonged to Synthetix(SNX), UniSwap(UNI), and Year.finance(YFI).
In addition to SEBA, Sygnum is working on launching custody and trading for tokens in the DeFi space like Maker, Synthetix, UniSwap, and more. The bank is working on adding other derivatives that will benefit banks, hedge funds, and other clients.
Sygnum and SEBA have the edge compared to other banks as they began offering crypto-related services way before.
But this has not hindered giant banks like BBVA(Banco Bilbao Vizcaya Argentaria) Switzerland to offer trading and custody services to its clients, specifically private banking clients. This trading and custody service is more so focused on Bitcoin. Along with permitting customers to convert between Bitcoin and fiat currencies automatically. This is the beginning of a wider approach to cryptocurrencies, as there will be more added in the future.
