Tezos was one of 35 blockchain foundations set up in Zug’s Crypto Valley at the height of the initial coin offering (ICO) crowdfunding explosion last year. But this might represent a high-water mark as the authorities tackle controversies that have trailed in their wake.
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When not covering fintech, cryptocurrencies, blockchain, banks and trade, swissinfo.ch's business correspondent can be found playing cricket on various grounds in Switzerland - including the frozen lake of St Moritz.
In its annual report, SwissFoundations says that the financial and foundation regulators are more closely scrutinising so-called ‘crypto foundations’ following a high-profile corporate governance row at the Zug-based Tezos Foundation, which was set up to manage the $232 million (CHF231 million) raised by its ICO last year.
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Swiss charitable foundations continue to flourish
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Switzerland has one of the highest concentrations of philanthropic foundations in the world – and the sector keeps growing strongly.
The annual report states that since the formation of the Ethereum Foundation in 2014, there are now around 40 such bodies in canton Zug. The vast majority (35) were founded last year as ICOs raised more than $4 billion (CHF3.9 billion) globally, and some CHF850 million in Switzerland.
These comprised the vast majority of all the 47 foundations set up in the canton last year, fueling a 15% increase in formations in Zug – an increase that is well above the national average of 1.3%. The report does not say how much money is being held in these foundations.
Blockchain foundations are charged with spending the assets raised from ICOs on research into the new technology and the applications that run on these platforms.
But the practice of turning foundations into the piggybanks of blockchain start-ups had raised eyebrows even before the Tezos scandal, which was finally resolved in February. This is because of the blurring of philanthropic and commercial lines of some projects. While such platforms claim to serve a social function by improving technology, they can also come with the allure of large financial windfalls for their founders and early investors.
“In the coming years sooner or later there will be more regulation for blockchain foundations in Switzerland but now it’s a little bit the ‘Wild West’,” Georg von Schnurbein, director of the Center for Philanthropy Studies at the University of Basel, told swissinfo.ch.
In the last 12 months, Switzerland has gone out of its way to attract cryptocurrency start-ups, with Economics Minister Johann Schneider-Ammann in January declaring his ambition of turning the country into a “Crypto Nation”.
The financial regulator has also led the way in setting up a regulatory framework for crypto companies. This has helped attract many of the largest global ICOs to Switzerland.
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Swiss start-ups choose a new way of doing business
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Swiss start-up are opting for a new financing method – the Initial Coin Offering.
Macron will attend Swiss summit on Ukraine, says Zelensky
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Swiss centre records over 200 victims of human trafficking
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Last year 317 people took part in a protection programme run by the Specialist Unit for Trafficking in Women and Women’s Migration (FIZ) in German-speaking Switzerland.
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Switzerland tarred by fresh crypto scandal
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The row bears some of the hallmarks of the recent Tezos scandal that brought unwanted global attention to the self-styled Crypto Valley in canton Zug. In this case the key actors are German and the dispute may end up in the Berlin courts. But the fact that the company was established in Baar last October…
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A senior Swiss government official has dismissed fears that a new method of funding for crypto start-ups has mushroomed out of control.
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US crypto investor Tim Draper believes Switzerland has missed the boat in establishing itself as an attractive global hub for blockchain start-ups.
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If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.