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Swiss Crypto Haven Zug to Pilot Blockchain Voting

Switzerland’s progressive blockchain center in Zug is going to conduct the first blockchain-based test vote later this month, reports Coinspeaker.

In 2016, Zug was the first city in the world to accept Bitcoin (BTC) as payment for certain municipality services, and also established ‘Crypto Valley’, a not-for-profit association supporting the development of blockchain and cryptography-related technologies and businesses.

One reason for Switzerland’s success as a center for blockchain and fintech, according to Swiss law firm MME, is the country’s openness to new business concepts and innovation. Marin Eckert MME partner said, “Swiss regulators are among the few that really have a deep understanding of the technology and how it works.”

Bitfinex, the fifth-largest cryptocurrency exchange by 24-hour trading volume, planned to leave its current base in Hong Kong and relocate its resources to Switzerland in March of this year.

The trial blockchain-powered vote will utilize Zug’s eID system voting on minor issues and the future of the ID system itself. Some of the municipal services that the public will be asked to vote on include annual fireworks displays, digital ID library lending, digital entry ID parking fees and electronic tax returns.

Owners must be in possession of a digital ID in order to place their yes/no votes which will be held on 25 June. The eID system was established in November 2017, but at this stage only includes 200 users who registered in a pilot for payment of municipal services last year.  Registered voters can get their voices heard by downloading the uPort app to smartphones and then submitting their vote electronically.

Zug is not alone in Switzerland in term of its blockchain- and cryptocurrency-friendly projects, and utility payment facilities, as it has a rival in the southern Swiss-Italian border town of Chiasso, which announced earlier this year that it planned to take Bitcoin to settle up to CHF 250 (Swiss francs equivalent to USD 265) of tax bills starting from January 2018.

 

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Switzerland Plans to Become Blockchain Nation

Out of the world’s six biggest initial coin offerings (ICOs) last year, four took place in Switzerland, according to Swiss financial watchdog, Swiss Financial Market Supervisory Authority (FINMA).

Along with Gibraltar and Malta, Switzerland is fast becoming a global hub for blockchain and cryptocurrencies, with investors from all over the world moving there. Towns such as Zug, a small town of 120,000 people just a short drive from Zurich, and the southern Italian-speaking Swiss town of Chiasso, are beginning to make a name for themselves in the global crypto space.

Zug has long been a global economic center, attracting large investment firms, pharmaceutical companies, commodity trading groups and thousands of other companies all benefiting from a favorable corporate tax rate of 14.6%.

Lately, 200 blockchain companies have joined the incumbents in Zug, now being tagged as ‘Crypto Valley‘, so named after the association set up there in 2013 to attract startups to cryptocurrency. Since 2016, the town has even been accepting Bitcoin payments for social services and was the first town to install crypto ATMs.

One reason for Switzerland’s success as a center for blockchain and fintech, according to Swiss law firm MME, is the country’s openness to new business concepts and innovation. Marin Eckert MME partner said, “Swiss regulators are among the few that really have a deep understanding of the technology and how it works.”

Johann Schneider-Ammann, Switzerland’s economics minister, said that the landlocked country should strive to “become the crypto-nation” earlier this year, calling cryptocurrencies part of the “fourth industrial revolution”, yet the government, rather than fully embracing cryptocurrency, seems more focused on promoting blockchain technology enterprises.

Despite Switzerland’s tradition of banking secrecy which dates back to the Middle Ages, distributed ledger technology (DLT) has been of little interest to major banking players in the Alpine country. Some smaller banks have introduced cryptocurrency asset management schemes over the past few years but the larger banks remain skeptical.

Andrea Maechler, governing board member of the Swiss National Bank (SNB), suggested that blockchain technology had “potential”, but cryptocurrencies still weren’t “comparable with money”.

The Swiss Blockchain Taskforce clearly sees the potential of DLT. Based in Crypto Valley, the organization has released a white paper drawn up by some 50 industry leaders, scientists and political representatives with recommendations for the future regulations and strengthening of the industry.

The Swiss Federal Council created a regulatory sandbox last year to allow startups to experiment with fintech developments such as blockchain and to attract more such organizations to Switzerland.

 

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Swiss National Bank Remains Cool Towards Crypto

In a speech in Zurich last week, Andrea Maechler, governing board member of the Swiss National Bank (SNB), suggested that blockchain technology had “potential”, but cryptocurrencies still weren’t “comparable with money”.

In recent years, Swiss banks have been reluctant to have anything to do with cryptocurrency firms. Despite Switzerland’s tradition of banking secrecy which dates back to the Middle Ages, a new banking “secrecy”, distributed ledger technology (DLT), has been of little interest to major banking players in the Alpine country.  Some smaller banks have introduced cryptocurrency asset management schemes over the past few years but the larger banks remain skeptical.

Outside of the banking sector, the Swiss have warmed to digital currencies. Dozens of startups have used blockchain technology to raise millions of Swiss francs through initial coin offerings. In Zug, 30 kilometres south of Zurich, huge amounts of digital currencies have traded daily since 2013 at Crypto Valley.  The organization is self-described as being an “independent, government-supported organization… dedicated to developing and executing a community-driven program targeted at establishing and growing our ecosystem”.

Maechler’s address highlighted the fact that SNB was still concerned about the “risks” behind “new innovations”. Referring to blockchain technology, she indicated that banking security was particularly important in the current Swiss banking system although the bank welcomed “innovations which advance efficiency”.

The co-existence of two systems within the Swiss banking system was another area of concern. Meaechler suggested that “should DLT take hold in securities settlement, the question would then arise as to how DLT-based securities systems and conventional central bank systems can coexist”. She argued that it would be the market that would decide “which technologies and solutions would prevail”.

Her final comments would offer little solace to those in Switzerland’s cryptocurrency environment looking for more cooperation between crypto exchanges and banking sectors. Viewing any synergy as a matter of “debate”, she suggested: “Digital central bank money for the general public is not necessary to ensure an efficient system for cashless payments. It would deliver few advantages but would give rise to incalculable risks with regard to financial stability.”

 

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South Korea Regulators Preparing to Announce Cryptocurrency Taxation Laws

Reports indicate the South Korean ministry of strategy and finance is to begin taxing cryptocurrency in a bid to regulate the crypto sector by 2019.

Since the winter of 2018, South Korea has garnered a great deal of attention as a key crypto-battleground; the rumoured ICO bans, exchange shutdowns and misleading negative press coverage has contributed to making South Korea one of the most misunderstood locations when it comes to cryptocurrencies.

But reports, on the contrary, are emerging at a hastening pace, and now South Korean regulators are reportedly planning to announce placing a capital gains tax and other income taxes on virtual money. In a statement made to Financial News, a ministry official said:

“We do not have a specific time frame, but we are thinking about announcing a virtual money tax in the first half of the year”.

The snowball effect

Negative speculation surrounding cryptocurrency in the country began appearing in January and then very slowly, as the clarity around purported crypto bans came to light, it became apparent that things were, in fact, moving in a positive direction.

As February rolled through, discussions of regulation in South Korea were brewing especially when the chief of South Korea’s Finance Supervisory Service (FSS), Choe Heung-Sik made these comments at a press conference:

“The whole world is now framing the outline (for cryptocurrency) and therefore (the government) should rather work more on normalization than increasing regulation.”.

Remarks such as these have made for a snowball effect in the global discussion of cryptocurrency. Most recently, BitcoinNews reported that Park Won-Soon, Mayor of Seoul is bringing forth new plans to adopt blockchain technologies with remarkable intentions to create Seoul’s very own cryptocurrency.

Government officials in South Korea have conducted direct investigations in several countries around the world, including Japan, the United Kingdom and the United States. Officials made conclusions that each country has its own approaches on how to categorize cryptocurrencies for taxation purposes:

“Currently, the US and the UK are taxed with capital gains tax, Japan with miscellaneous income, and Germany with other income. It is because the characteristics of virtual money were different in each country, such as payment means, monetary ability, financial assets, and so on. However, these countries have found that there are few cases where actual tax is imposed, as opposed to taxation based on the principle that there is a tax on income.”.

Pioneering efforts

These are very telling moments for the future of the cryptocurrency industry. South Korea’s efforts over the course of the next year could contribute to those of Switzerland, which at present is home of the Crypto Valley Association. Switzerland is beginning to receive increasing enquiries concerning blockchain technologies and is formally investigating the economic purposes and functions of the tokens.

South Korea, the third largest fiat-to-Bitcoin market in the world, is approaching the creation of positive conditions for regulatory frameworks, preparing for its capital to have its own cryptocurrency and is in now preparing for various taxation laws that would begin to normalize the existence of cryptocurrencies in the country. These are several huge steps in the right direction.

 

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Swiss Financial Watchdog Reports Majority of Enquiries Received are Blockchain Related

The Swiss Financial Market Supervisory Authority (FINMA) has reported that it is receiving increasing levels of enquiries into blockchain, cryptocurrencies and initial coin offerings (ICOs).

Switzerland makes positive steps

FINMA announced its investigation into ICOs in a September 2017 press release, creating speculation that some parts of ICO procedures may already come under existing regulations. They wrote:

“How ICOs are structured from technical, functional and business standpoints varies markedly from offering to offering. ICOs are currently not governed by specific regulations, either globally or in Switzerland.”

They also outlined the present concerns with ICOs, saying that “provisions on combating money laundering and terrorist financing, banking law provisions, provisions on securities trading and provisions set out in collective investment scheme legislation”.

Since then, FINMA has released its annual report for 2017 which shows that a whopping  60% of the enquiries they have received are to do with blockchain, cryptocurrency, smart contracts digital assets and ICOs.

Clampdown but no outright ban

Last September was somewhat of a shaky month for ICOs in Switzerland; FINMA announced the shutdown of groups and associations that had connections with sales of a cryptocurrency that acted in a centralized manner.

The “E-Coin”, being entirely controlled only by those who are selling it, came under fire as they were receiving large sums of money in a similar way to that of the deposit-taking side banks which, without the correct financial market license, is illegal.

Signs of hope in Switzerland

What’s significant is that the financial regulator appears to be treating the technology with far less cynicism than other international regulators have.

Since then, FINMA released another press release in February 2018, outlining the regulator’s intentions to treat carefully selected ICO tokens as securities.

Focusing on the economic purpose and function of tokens, it outlined three categories for the cryptocurrencies: utility tokens, asset tokens and payment tokens. It goes on to say in the release:

“FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements under the Swiss Code of Obligations.”.

The Swiss watchdog is opening up favorable doors for the industry to begin to engage in discussions to see how the technology can exist in a compliant legal framework within the country.

It is already the home of The Crypto Valley Association, one of the world’s leaders in distributed ledger and blockchain economics, and the government is often praised by blockchain groups from all over the world for not restricting the movements and innovations up blockchain entrepreneurs and developers.

Switzerland is acknowledging the great potential within the technology and isn’t seeking to shut it down outright, but instead working toward something safer, more practical and functional for the coming future.

 

 

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