Swiss Govt. Rejects Crypto Valley’s $103M COVID-19 Relief Loan for Blockchain Startups
Switzerland’s own crypto valley located in the Canton of Zug known for its business-oriented regulations is struggling to keep businesses afloat.
Its request of 100 million francs, which is around $103 million USD, as a COVID-19 relief package has been rejected by the Swiss government. The request for the relief package was initiated back in April by the finance director Heinz Taennle, reported a local daily.
The crypto valley would now have to depend on the 15 million Swiss Francs loan announced by the canton of Zug. The application for 100 million francs relief package was the only one rejected by the federal government among 24 similar COVID-19 related relief packages.
Almost two-thirds of the crypto valley blockchain firms which applied for the Federal loans failed to receive any assistance from the government.
The capital crunch in the crypto valley mainly occurred due to the ongoing coronavirus pandemic. Forcing many private equity investors into offering capital support in the fintech valley.
The New Loan Scheme Would be a Joint Effort by Federal and State Government
The newly announced 15 million swiss francs loan scheme would require fintech firms in the valley to submit their loan application by May 27th, 2020, and the loan can be applied to any bank in Switzerland. The loan amount would be covered by both the Federal government and the canton of Zug, where the federal government would offer 65% of the amount and the Zug would offer 35% of the loaned amount.
The situation in the crypto valley is getting worse with each passing day, as 80% of the operating companies in the valley report that they won’t be able to make it through the end of the year.
The main reason behind such outcry is the reluctance of equity investors to invest their money amid financial uncertainty which has been looming even before the pandemic struck which made the situation even worse. Almost 57% of the firms in the crypto valley have laid off a significant portions of their workforce, turning the crypto valley into death valley.