Switzerland attracts more blockchain firms despite crypto meltdown

Global leaders were treated to a crypto charm offensive at the World Economic Forum in Davos last week. Finance Minister Ueli Maurer and Switzerland Global Enterprise, which is responsible for attracting business, took the opportunity to roll out the red carpet for foreign blockchain companies.

Competition for crypto business is intensifying among countries. The United Arab Emirates, for example, is busy handing out financial licenses while Dubai’s free zone has thrown open its doors to footloose crypto firms. The world’s largest crypto exchange, Binance, has been given regulatory approval to operate in France.

As I reported in March, Lugano has partnered with the stablecoin Tether to turn the southern Swiss city into the “European Capital of Crypto”. Switzerland is eager to further swell its ranks of more than 1,000 blockchain enterprises and 6,000 jobs.

According to the recently published Swiss Digital Asset Report, another two global heavyweights, Copper.co and Bitpanda are opening operations in Switzerland. This follows the recent arrival of BitMEX and the FTX crypto exchange.

The London-headquartered Copper.co has indeed confirmed its entrance to Crypto Nation Switzerland. It already has an office in Zug with ’a handful’ of staff who have been setting up the business.

But the company, which helps institutional investors venture into digital asset trading, has now been given the regulatory green light to launch full operations.

Copper.co announced today that it has joined the Self-Regulatory Organisation VQF. Swiss SROs act as a staging post between financial firms and the Swiss Financial Market Supervisory Authority (Finma). SROs set Anti-Money Laundering standards and monitor their members’ compliance. The SRO as an entity answers to Finma as opposed to its individual member companies reporting directly to the regulator.

Many digital assets financial companies in Switzerland are registered with one of Switzerland’s 11 SROs. Financial intermediaries are obliged to either submit to direct Finma regulation or join an SRO to carry out their business in SwitzerlandExternal link.

Joining the dots

Copper.co is one of a growing number of firms that are building the plumbing to connect asset managers and hedge funds with cryptocurrency exchanges and the world of decentralised finance (DeFi). It’s recognised as one of the world’s leading venues for institutional investors to deposit funds securely and settle trading positions.

“Switzerland, as a pioneer location for digital assets, provides an ideal foothold from which to grow our mainland European presence,” said Copper.co CEO Dmitry Tokarev. But it’s unclear at this stage exactly what expansion plans to company has in Switzerland.

It’s also unclear to me how the digital assets sector, and particularly DeFi, will recover from the recent carnage inflicted by collapse of the Terra stablecoin (UST).

Earlier this month, the so-called ‘reign of Terra’ sent the entire cryptocurrency market into a tailspin, wiping tens of billions from the value of bitcoin and every other cryptocurrency. UST was supposed to provide stability to the DeFi trading markets – it failed in spectacular fashion. Many investors lost a lot of money, and it might take a while before they summon up the courage to re-enter this volatile sector.

I’ll be exploring this theme in greater depth – and what it means for the Swiss crypto scene – during the Crypto Valley Association annual conference later this week.