Swiss crypto industry insensitive to New Year’s bitcoin crash


The new year has started with a sharp drop in the price of bitcoin – and some intriguing stories surrounding the Swiss cryptocurrency scene.

This content was published on January 10, 2022 – 8:00 AM

The industry is well used to the volatility of the price of cryptocurrencies and continues with its expansion plans regardless of how many dollars you can currently get for your bitcoin.

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New faces in Switzerland’s oldest crypto company

As management turmoil has taken place, Bitcoin Suisse has raised the bar to a new level. The crypto firm’s president (and founder) and its CEO both decided to step down within three weeks.

CEO Arthur Vayloyan has just announced that he will hand over the reins to former Barclays and UBS bank executive Dirk Klee in April. Flamboyant founder Niklas Nikolajsen has just stepped down as chairman of the board. Both will remain with the company as board representatives, but have taken a step back from day-to-day business.

The departure of two senior Bitcoin Switzerland executives comes on top of a recent management reshuffle that saw new employees hired to lead the company’s legal and compliance departments.

You don’t have to look very far to find a likely reason for the changes. In March, Bitcoin Switzerland was denied a banking licenseExternal link when the financial regulator discovered weaknesses in its anti-money laundering compliance systems.

Finma’s unusually harsh public reprimand has clouded Bitcoin Suisse’s strategic plans and tarnished its reputation as a bridge between traditional finance and cryptocurrencies.

Despite the start of Bitcoin Switzerland in 2013, Nikolajsen’s decision to step back is perhaps the least surprising.

I recently wrote about Switzerland’s intention to gentrify the wild world of cryptocurrencies.External link. Nikolajsen’s anti-establishment tendencies, combined with a passion for collecting vintage war tanks, are not naturally suited to making decentralized finance more palatable to lawmakers and regulators.

Vayloyan’s decision to step back as CEO after just four years at the helm was more revealing – especially the timing, just after the company appointed a new boardroom manager.

It’s unclear whether Bitcoin Suisse, one of Switzerland’s oldest and most successful crypto companies, will apply for a banking license again or even partner with an existing bank.

The appointment of an experienced banker (Klee) with a strong wealth management orientation as the new CEO suggests the company is betting on richer clients showing interest in crypto. It also indicates a new strategic direction towards expanding Bitcoin Switzerland’s operations outside of Switzerland.

Digital gold mining

I wrote some time ago about the unsuccessful efforts to set up cryptocurrency mining operations.External link in Swiss. Mining is the computer method of creating bitcoin from scratch. The highly competitive market today requires a lot of concentrated computing power.

It is curious that the Swiss cybersecurity company WISeKey plans to invest $ 10 million to set up bitcoin mining operations in Switzerland over the next two years. It is also difficult to see how they can succeed where others have failed before.

Switzerland has abundant hydroelectric power, but its price is high compared to many other countries. This is why the Alpine Mining project had to abandon its efforts to mine cryptocurrencies at the Italian-Swiss border, despite the negotiation of favorable electricity tariffs with the local authority.

WISeKey points out that the crypto mining industry was forced to undergo certain changes after China, which had been one of the dominant regions for the creation of bitcoin, suddenly banned the practice. This has now focused crypto mining in the United States. Another notable mining country, Kazakhstan, is currently going through a violent social upheaval that could impact its bitcoin production.

So maybe WISeKey spotted a gap in the market. The Canton of Geneva-based company says it hopes to open crypto mines in the United States and Gibraltar as well.

The move appears to be a ploy to increase the company’s growing reach of cybersecurity in cryptocurrencies. It offers services that protect databases against cyberjacking, when malicious actors install cuckoo malware that illegally siphons electricity to make bitcoin for criminals.

IPO update

In October, I announced that Swiss crypto company Smart Valor was considering listing on a European stock exchange. That plan came closer to reality after Swedish firm Nasdaq First North Growth Market recently granted conditional approval for an initial public offering. A launch date (very likely for this year) has not yet been announced.

Smart Valor currently offers cryptocurrency trading from Liechtenstein, but it could also consider a DLT (Distributed Ledger Technology) exchange license in Switzerland. This license category was introduced in August as part of a larger set of legal reforms to encompass blockchain trading. A DLT exchange would be able to trade cryptocurrencies and a new generation of blockchain-compliant digital securities.

This could be of interest to other international actors. The Seychelles-incorporated BitMEX exchange, which has had its fair share of regulatory issues, is in the process of setting up a Swiss brokerage unit. Could this be the springboard for establishing legitimate crypto trading operations in the Alpine State?

The rumor mill says other crypto exchanges could move to Switzerland as well. Hope to have more information about this in the near future.

I will be debriefing the Crypto Finance conference in St Moritz January 12-14. I’m already hearing about great fundraising stories, so stay tuned to my Twitter feed @ matthewallen40External link to hear the news.

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