Why the Bank Failures are Good for Switzerland?

The sudden, and perhaps unexpected, collapse of several banks all at once was the start 2023 DIDN’T need!

But here we are and the Silicon Valley Bank and Silvergate Capital’s demise, coupled with the war that the US regulator has apparently waged on crypto, spells nothing but good news for Switzerland!

A Nation with Unparalleled Stability

Switzerland has become a crypto hub due to several factors, including its stable political environment, strong financial infrastructure, and favorable regulatory environment.

With a long history of political stability, neutrality, and privacy, it is an attractive destination for financial institutions and individuals seeking a secure and confidential environment for their assets. This reputation for privacy and security has made it a natural fit for the crypto industry, which values decentralized and secure systems.

A well-developed financial infrastructure with a highly skilled workforce also means that established financial institutions are capable of supporting the needs of the crypto industry. Switzerland is also home to many international banks and asset management firms, which can provide financing and other support for crypto projects.

Against a backdrop of a favorable regulatory environment for the crypto industry, in 2019, Switzerland introduced a new set of regulations governing blockchain technology and cryptocurrency trading, which provides clarity and certainty for businesses operating in this space. These regulations also provide a framework for ICOs (Initial Coin Offerings) and STOs (Security Token Offerings), which are popular fundraising methods for blockchain-based startups.

A Sudden Influx of International Crypto Interest

The relationship between the cryptocurrency industry and banks has always been complex and is constantly evolving. While some banks remain hesitant to engage with the cryptocurrency industry, over the last few years more financial institutions have recognized the potential benefits of working with cryptocurrencies and offer services to customers in this space.

However, with not all banks being willing to work with crypto players due to concerns over regulatory compliance, security, and reputational risks, coupled with the collapse of two of the major ones at the start of 2023, more and more crypto companies are scrambling to find alternative solutions.

Yang Lan, co-founder at Swiss crypto firm Fiat24, says: “it’s no big surprise to see that interest in Switzerland as a crypto haven has surged lately. The crackdown in the USA has only brought more attention to the crypto valley, and the struggles of finding crypto-friendly banks and partnerships abroad will surely see the sector grow exponentially this year.”

While Signature Bank and Silvergate Capital effectively out of the picture, it remains to be seen if Switzerland’s famous financial infrastructure can support corporate demands and needs.

Read Also: Tim Draper tells businesses to Diversify, Decentralize, and Hedge with Bitcoin in the SVB aftermath

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