In Switzerland, crypto asset start-ups have multiplied thanks to the pragmatism of the federal government, which wanted to frame cryptocurrencies making the country a pioneer of blockchain and crypto assets for the financial sector.
The advantageous taxation of the canton of Zug is an additional argument and taxes can be paid with bitcoin or ethereum.
But The late 2022 collapse of cryptocurrency exchange FTX, followed by cryptocurrency lending firm Genesis, created a panic in the industry, although cryptocurrencies have since started to recover.
“A lot happened in 2022,” says Dirk Klee, head of Bitcoin Switzerland, in an interview with AFP, citing the collapse of the Terra Luna stablecoin, the bankruptcy of cryptocurrency investment platform Celsius and the liquidation of the Three fund. Arrows Capital.
This “exposed the weaknesses” of some companies in a “still very young” sector, but “it is not due to a defect in technology, but to poor management,” he says.
According to a study by the Bank for International Settlements, some $450 billion evaporated in the financial market shocks triggered by Terra Luna, with estimated losses of $200 billion from FTX.
“The FTX bankruptcy is a very bad incident for our industry. It will set us back, at least for a year or two,” said Mathias Ruch, founder and head of venture capital firm CV VC.
In 2022, about 1,135 crypto asset companies were installed in Switzerland and Liechtenstein, according to a study carried out by CV VC.
But the number of unicorns – companies valued at more than 1,000 million dollars – fell to 9, against 14 in 2021 and jobs decreased 4%, to 5,766 positions.
At the end of January, Bitcoin Switzerland, the first company in the sector based in Zug, announced a reduction in staff.
Concern is now focused above all on financing. In mid-February, the Taurus platform managed to raise funds from big banks like Credit Suisse and Deutsche Bank.
For Jérôme Bailly, co-president of the Crypto Valley association, in this period the situation will be more complex for “small start-ups”.
Created in 2017, the association aims to facilitate exchanges between companies, whether based in Zug -where blockchain startups are concentrated, in the canton of Neuchâtel, more focused on cryptocurrencies-, or in Geneva and Zurich, where projects for the banking sector predominate.
According to Bailly, the current shocks resemble the bursting of the internet bubble of the 2000s, from which giants like Google and Amazon eventually emerged. “We have exactly the same cycles, accelerated by the huge frauds of 2022,” he says.
The bubble on crypto assets “deflated because everything had increased too much. I think we will see a major reset,” said Emi Lorincz, president of the Crypto Valley association, to AFP.
The sector is preparing to face more regulation as supervisors are tightening their tone.
However, according to Darko Stefanoski, a partner at audit and advisory firm EY, Switzerland is already “on the right track” as Finma, the Swiss market gendarme, quickly set the rules.
“This gives security to companies, markets and customers. Because the rules are clear,” he declares. Regulation in other countries will bring even more transparency, which will be “good for Crypto Valley,” she announces.
For Réda Aboutika, an analyst at X-Trade Brokers, “a icy wind blew across the entire industry”, but these tremors “were perhaps a necessary evil that will allow the sector to be reorganized”, he judges.
Source: Ambito
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