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Switzerland’s Crypto Valley Turning to Death Valley with Disapproval of $103 Million Support Package from Government

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Jayashree Ingle Follow

INDIA

Aug, 26 2020

Aug, 26 2020

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The Corona Pandemic has changed the entire course of the global economies. Switzerland seems no exception tackling this situation as it is reviving its economic policies in recent times.

The Swiss government has just disapproved 100 million Swiss Francs ($102.7million) credit proposal from the Crypto Valley displaying apathy towards the growth of Blockchain and crypto industry.  Switzerland’s Crypto Valley is a fintech hub situated in the Zug region, which accommodates crypto and blockchain companies with favorable regulatory conditions.

A meeting was conducted last week by the cantonal government, which reviewed more than two dozen applications from various industries applying for the COVID-19 support Package.  

Why the Loan Proposal from the Crypto Valley was Rejected?

Switzerland's government had announced in April that it will issue 154 million Swiss Francs as part of the credit package for fintech firms to accelerate their businesses during the slowdown due to the corona crisis. The Zug Finance Director Heinz Taennler thus had applied for 100 million Francs ($102.7million) loan package to convert it to shares.

The COVID pandemic has forced many private equity investors to freeze their funding for the fintech and blockchain companies. Now this rejection for the support package will push the dying crypto startups in a more dire condition.

The majority of the Zug government council didn’t approve Taannler’s proposal while proposals from other industries were readily approved.

Present Condition of the Swiss Crypto industry

The once-flourishing blockchain industry in Switzerland is now struggling to survive as most of the investors have pulled out the investments. As per the latest survey by the Swiss Blockchain Federation, about 80 % crypto firms out of 250 are being bankrupted currently. And half of the 50 largest crypto companies could survive till the end of this year.

Repercussions of the Loan package Refusal 

The disapproval from the Zug government will hamper the industry badly. Some of the speculators are predicting that the Crypto valley may soon be known as “Death Valley” as a large number of firms are dying due to dearth of venture capital.

Daniel Haudenschild, President of the Crypto Valley Association however refuted these predictions. He said that the industry is strong enough to sustain repeated blows including the refusal of emergency loans from banks as well.

He firmly commented,” People in this space truly believe in what they are doing. If one of the projects fails, they will just pick up again with another one. We are not going to see a mass exodus from the ecosystem.”

He asserted that with the decentralized spirit of the industry, the modus operand of the crypto scene does not include serving on states handouts – we are not a state sponsored industry. 


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Jayashree Ingle

CBW - External Analyst

INDIA

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