Swiss crypto industry unfazed by New Year bitcoin crash

The new year has begun with a sharp drop in the price of Bitcoin – and some interesting stories about the cryptocurrency scene in Switzerland.

This content was published on Jan 10, 2022 – 08:00

The industry is well used to cryptocurrency price volatility and continues to expand no matter how many dollars you can currently get for your bitcoins.

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New bosses at Switzerland’s oldest crypto company

As management changes continue, Bitcoin Suisse has raised the standard to a new level. The crypto company’s chairman (and founder) and CEO both decided to step down within three weeks.

CEO Arthur Vaillan just announced that he will hand the reins over to Dirk Klee, the former CEO of Barclays and UBS, in April. Flamboyant founder Niklas Nikolajsen has just resigned from his role as Chairman of the Board of Directors. Both will remain in the company as representatives of the board of directors but have backed away from day-to-day affairs.

The departure of Bitcoin Suisse’s two most senior managers comes on top of a recent executive reshuffle that saw new hires to head the company’s legal and compliance departments.

You don’t have to look far to find a possible cause for the changes. In March, Bitcoin Suisse was denied a banking licenseExternal link When the financial regulator found deficiencies in the anti-money laundering compliance systems.

Finma’s unusually severe public reprimand has created a hole in Bitcoin Suisse’s strategic plans and damaged its reputation as a bridge between traditional finance and cryptocurrency.

Although Bitcoin Suisse launched in 2013, Nikolajsen’s decision to step back is perhaps the least surprising.

I recently wrote about Switzerland’s intention to improve the wild world of cryptocurrencyExternal link. Nikolajsen’s anti-establishment tendencies, combined with his passion for collecting old wartime tanks, are not naturally a good fit for making decentralized finance more palatable to lawmakers and regulators.

Vayloyan’s decision to step down as CEO after just four years in office was remarkable — particularly the timing, after the company appointed a new chairman to the board.

It is not clear if Bitcoin Suisse, one of the oldest and most successful crypto companies in Switzerland, will re-apply for a banking license or even a partnership with an existing bank.

Hiring a seasoned banker (Klee), with a strong inclination toward wealth management, as the new CEO suggests the company is betting on wealthier clients who are showing interest in cryptocurrency. It also indicates a new strategic direction towards expanding Bitcoin Suisse’s operations outside Switzerland.

digital gold mining

I wrote some time ago about the failed efforts to set up cryptocurrency mining operationsExternal link in Switzerland. Mining is the computational way to create the likes of Bitcoin out of nowhere. The highly competitive market requires a lot of focused computing power these days.

Curiously, Swiss cybersecurity firm WISeKey is planning 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 previously.

Switzerland has abundant hydroelectric power, but it comes at a high price compared to many other countries. This is why the Alpine Mining project had to abandon its crypto-mining efforts on the Swiss-Italian border, despite negotiating favorable electricity prices with the local authority.

WISeKey notes that the cryptocurrency mining industry has been forced to make some changes after China, which was one of the dominant regions for bitcoin creation, suddenly banned the practice. This has now led to the concentration of cryptocurrency mining in the United States. Another prominent mining country, Kazakhstan, is currently experiencing violent social unrest that may have an impact on bitcoin production.

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

This move appears to be a ploy to enhance the company’s cybersecurity access to cryptocurrencies. It offers services that protect databases from “cyber hack”, when malicious actors implant malicious cuckoo software that illegally spews electricity to make bitcoins for criminals.

Subscription update

In October, it broke the news that Swiss crypto company Smart Valor is planning to list on a European exchange. That plan took a step closer to becoming a reality after Sweden-based Nasdaq’s first Nordic growth marketplace recently granted conditional approval for an initial public offering. A release date has not been announced (most likely for this year).

Smart Valor currently offers cryptocurrency trading from Liechtenstein, but may also look to obtain a DLT (Distributed Ledger Technology) Exchange license in Switzerland. This license category was introduced in August as part of a broader package of legal reforms to include blockchain trading. The DLT exchange will be able to trade cryptocurrencies and a new breed of digital securities compatible with the blockchain.

This may be of interest to other international players. Seychelles-listed exchange BitMEX, which has had its fair share of regulatory woes, is in the process of setting up a Swiss brokerage unit. Could this be a starting point for establishing legitimate cryptocurrency exchanges in the Alpine state?

The rumor mill says that other cryptocurrency exchanges may also move to Switzerland. I hope to have more information on this in the near future.

I will be reporting from the Crypto Finance Conference in St Moritz between January 12-14. I’ve already heard about some great funding stories, so stay tuned to my Twitter feed Lord save herExternal link to hear the news.