The Boom of Suisse-based Cryptocurrency Foundations Citing ‘Too Much of a Good Thing’
Switzerland is known for its foundations, many of which have been started with a philanthropic purpose and have transformed to provide an application. Currently, there are 13,000 registered applications in the country and according to Finews, some of the most prominent for-profit firms include Rolex and Victorinox. Moreover, the country has become a hotspot for crypto foundations.
Indeed, most of the foundations launched in 2017 and 2018 were related to digital assets. Many of these foundations were registered in Zug, a canton known as the country’s “Crypto Valley.” Foundations seem to be the ideal vehicle for a crypto firm, especially due to the community-led approach. Zug has also become a popular place for a crypto business boom due to the ease of which they allow for ICOs. The area is recognized for low taxes and lenient regulations.
Interestingly enough, though there has been a boom in crypto business in Switzerland, there now looks to be a slowdown. Raffaella Piraino of the Energy Web Forum has noted that the excess has caused the model to fail. Foundations often begin their life with a great deal of money, which is then dispersed to many different projects. Although many cryptocurrency projects were founded as foundations, they did not follow the traditional model.
Rather than the funds flow from the foundations, they have come from outside investors to finance projects. As Oliver Arter of Zurch-based law firm Foriep explained, “It doesn’t make sense to tie up commercial activities in a Swiss foundation if the people involved expect a profit, or view it as an investment.” Piraino also added, “A foundation is a difficult animal to manage” in relation to the issues that the country’s crypto space is facing.