Digital Switzerland: in blockchain we trust for a sustainable future

AI, Big Data, Blockchain and FinTech are all key terms for anyone who wishes to survive in our industry in its current state of turbulence, which has been dubbed “the fourth industrial revolution.”

Switzerland, a small country nestled at the heart of Europe and undisputed champion of innovation, has found success in this digital era and has developed the means to become a major player in this field. A good example is the canton of Zug, which has become the Swiss heartland of blockchain and virtual currency capital in the space of a few years. According to a recent study by CVVC, PwC Strategy and Inacta, titled “The Crypto Valley’s Top 50”, Switzerland and Liechtenstein are already home to 750 blockchain-related companies employing more than 3,300 people. The 50 largest companies have an average valuation of $400 million. More than half of the blockchain companies are in the canton of Zug; however, 42 are based in Geneva and 39 in Tessin.

The creation of digital trust

Bitcoin made its appearance in the midst of a severe financial crisis. In this volatile environment, the public’s faith in financial institutions was eroded and created fertile ground for the emergence of a virtual currency, the well-known Bitcoin. Through its underlying blockchain technology, two parties who do not know each other are able to carry out transactions in a completely decentralised way. Trust, which was weakened during the crisis, has been strengthened again and reinvented itself through this technological alternative: blockchain. As an open system Bitcoin has its advantages, but it also has limitations in terms of scalability, confidentiality, control of the infrastructure and high energy consumption. Some of its disadvantages may be overcome by the use of closed systems and the constant development of technological innovation.

Does the legal, regulatory and tax framework need to be changed?

Although it offers a great deal of potential in many fields, blockchain, as with any emerging technology, raises the thorny issue of the legal and regulatory framework. France, an early activist wishing to ensure a high level of protection for investors, led the way in April 2016 with its order governing “Minibons” (a type of bond). Other European countries are following the trend and have also revised their legal framework, such as Malta, Luxembourg and Liechtenstein.

In Switzerland, the Swiss Federal Council decided that an ad hoc law, a “Lex blockchain”, is not required, but occasional adaptations of federal law may be required to introduce a more appropriate framework, in order to remove obstacles and limit the risk of abuse. With regard to ICOs (Initial Coin Offerings, or fund-raising by means of cryptoassets) and the predominant role played by Switzerland in this field, FINMA has clarified the rules of the game with its practical guide to ICOs.

At the crossroads of innovation and sustainability

Technological innovation and sustainability are not necessarily incompatible and may be combined in a joint approach. As the United Nations Development Programme (UNDP) states, “blockchain technology can contribute to the achievement of the 17 sustainable development goals – to end poverty, protect the planet and empower women and men by 2030 – in line with the aims of inclusive businesses”. Based on an analysis of 193 organisations, initiatives and projects that use blockchain to generate a social impact, Doug Galen from the Stanford Graduate School of Business believes that blockchain is effective in this. Many initiatives are developing in this area, both in the rest of the world and also in Switzerland; one example is KimboCare. This Swiss start-up, which is in the early social impact stage, is focused on making progress with the sustainable development goals by contributing to good health and well-being and gender equality through its future blockchain platform.

Conclusion 

Blockchain technology, which emerged when financial turmoil was at its peak, has become a buzzword, given its huge potential in not only the financial sector, but also in health and other sectors. As an open and modern country, Switzerland has been very quick to understand the potential economic and political benefits of this technology. Switzerland is therefore preparing for both its digital and sustainable future with blockchain now bringing together these two different aims.