Switzerland Scrambles to Regain "Cryptocurrency-Friendly" Status As Banks Dissuade Crypto-Businesses

As reported by Reuters on July 19, 2018, cryptocurrency projects based in Switzerland are feeling the heat from banks and financial service businesses, with two banking providers ceasing operations for crypto-businesses in recent months.

The move sent shivers down the spines of cryptocurrency players in the region, who promptly relocated their businesses to Switzerland after significant regulations about the blockchain and cryptocurrency industries were introduced in 2017-18.

Now, businesses fear the banking crackdowns are shifting to Gibraltar, Liechtenstein, and even the far-off Cayman Islands to prevent any unforeseen stoppages to their operations, of which banking supports forms a significant part.

Despite relevant legislation in place, Swiss banks are coaxing regulatory authorities to provide extra clarity and specify rules that apply to cryptocurrency businesses, before they can extend banking services.

As stated in the report, Switzerland's fourth-largest bank, Zuercher Kantonalbank has closed bank accounts of over twenty cryptocurrency businesses in 2017, despite being the largest bank to provide financial services to the sector earlier.

ZBK officials declined to comment on the nature of their decision in this regard but maintained no banking support is offered to any former or existing cryptocurrency clients.

Out of the country's 250 registered banks, only a few permitted companies to deposit funds raised via initial coin offerings, with only two banks allowing this service at the time of writing.

Banks claim several token issuers failed to conduct their due diligence on contributing investors, creating a potential crime if they allowed the storage of unauthorized money - a feature against globally-followed Anti-Money-Laundering procedures.

An official of the Swiss National Bank, Thomas Moser, stated representatives of a few cryptocurrency companies had approached the central authorities to intervene in the crisis.

Switzerland is reportedly working on regulations to addresses concerns from banks and encourage cryptocurrency businesses to remain in the region.