Swiss crypto-asset companies have long complained that they are being frozen out by the established banking system. Getting a standard business bank account is a monumental task if you deal in cryptos.
Swiss banks appear either afraid of reputational risks associated with the crypto world - or if you are inclined towards conspiracy theories – want to squeeze these new disruptors out by forbidding them basic financial services.
“The established banking system appears to be working against the cryptocurrency market in Switzerland,” according to Alexis Roussel, founder of Swiss crypto brokerage Bity (which incidentally does have an account with Neuchatel Cantonal Bank).
So the Bitcoin Association of Switzerlandexternal link (BAS) was alarmed to see a proposed change to the Swiss lawexternal link that would require all businesses and associations to have a bank account in Switzerland. “Requiring crypto start-ups to have a bank account would kill the Swiss crypto start-up scene,” BAS president Lucas Betschart told swissinfo.ch.
BAS has therefore taken advantage of a consultation period to lodge an objection to the proposed law changes.
In a written blog postexternal link, BAS board member Luzius Meisser said: “Getting a bank account sounds simple, but for crypto startups it is not. Most Swiss banks refuse to enter into a business relationship with any entity that has ‘Bitcoin’ in its name or is otherwise related to crypto currencies or blockchain technology.”
“This law threatens our very existence. If enacted, Bitcoin Association Switzerland would not be allowed to exist any longer as it is unlikely that we would find a Swiss bank that provides us with an account.”
So why does the Swiss government feel compelled to bring about such changes? It’s in response to pressure from the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposesexternal link. This is a body that polices all OECD member states to ensure that they do not encourage tax evasion, money laundering or corporate tax shenanigans.
In July 2016, the Global Forum recommended a number of changes to improve the transparency of Swiss legal entities and make tax dodging harder. Article 958g of the Swiss bill proposes that all companies, partnerships and legal entities with an annual turnover of at least CHF100,000 should be obliged to have a Swiss bank account.
It is not hard to see how this would make it easier to trace funds and prevent tax dodging. According to BAS, though, it is also easy to see how this would be the death knell for many crypto start-ups in Switzerland. This would hardly be in line with the stated aim of Swiss Economics Minister Johann Schneider-Ammann to turn Switzerland into a “Crypto Nation”.
It is not so easy to see how this circle could be squared, unless crypto firms are exempt or banks are forced to provide them with services regardless of what their compliance officers say.
The Swiss State Secretariat for International Financial Mattersexternal link said it has received BAS’s objection, which will be considered during the consultation period lasting until April 24.