Crypto In Switzerland

Today we’re going to talk about the current crypto regulations in a significant European financial hub. Switzerland has always been one of the first countries delivering fertile grounds to open the doors for the fresh, innovative financial technologies, and crypto is no exception. The peaceful, traditionally neutral state has managed to keep an optimistic, strictly objective, practical and constructive approach as regards the crypto economy.

Legitimacy of crypto in Switzerland

Switzerland is exceptionally crypto friendly. It puts just a few obstacles ahead of crypto exchanges or the utilization of crypto in general. Any crypto exchange that has received a license from the Swiss Financial Market Supervisory Authority (FINMA) can offer its services to people. Nonetheless, while this is no problem for any big player in the market, some smaller DeFi protocols and alternative token exchanges might actually lack this approval. As usual and as so often happens in other countries alike, this means that some crypto service providers remain in the gray zone from a regulatory perspective, where they are neither formally illegal, nor legal.

As a generally cryptocurrency friendly country however, the Swiss authorities usually do not actively seek out and block crypto sites. The regulatory framework for cryptocurrencies and tokens was further expanded in 2020, with the acceptance of the “Swiss Blockchain Act”. The Blockchain Act specifies that any token that can be transferred to any kind of blockchain infrastructure must be compliant with local anti-money laundering regulations. 

Crypto taxes in Switzerland

As per the currently standing Swiss regulations, crypto needs to be stated on annual tax returns and are subject to capital gains taxes, as they officially appear as “asset or property”. Swiss taxpayers are therefore obliged to pay taxes on cryptocurrencies they receive as a type of payment or salary or salary bonus package. The base for this tax is the value of the cryptocurrency on the day of receipt. 

While this might be perceived as favorable when tokens rise in value over time, right away it is also clear that this might as well create a risky situation. Taxpayers must pay taxes on tokens they have received based on their value on the day of the transaction, even if the value of said tokens has devalued significantly afterwards. In extreme situations this might even mean that the taxpayer no longer has the money to pay when the tax is due. This therefore is a clear potential point for improvement in the otherwise positive crypto regulatory framework. A perhaps more user-friendly approach that is already being applied in many other countries is taxing crypto investors only at times they exchange cryptocurrencies for fiat money, based on their value at that time. Mining rewards, staking rewards and airdrops are also taxable, as well as other forms of taxes potentially being applicable on crypto assets that grow in value over time.

Crypto usage availability in Switzerland

There are over 150 crypto ATMs active in Switzerland, which in terms of the crypto economy means a very good general coverage compared to the relatively small size of the country. The vast majority of these, however, are located in big population centers, thus crypto ATM availability outside of big cities is still an issue. This is nothing different in other countries either though, new technologies always appear first in financial hubs and need a significant amount of time to evenly spread all throughout less populated areas. 

The general adaptation of cryptocurrency payments is also excellent, with several cities, such as Lugano, even accepting the payment of taxes in Bitcoin, USD Tether and LVGA Token. Also, the picturesque lakeside city of Lugano is leading the country-wide movement for increasing the acceptance of crypto during daily transactions, mainly when purchasing everyday goods and services. While the constantly changing fiat value of crypto tokens, transaction speed and costs obviously deliver problems to solve, Lugano and other local communities are partnering with Tether to address these issues.

Switzerland-based crypto companies

You surely will recognize at least a few popular crypto projects based in Switzerland’s Crypto Valley, a huge blockchain ecosystem. Due to the friendly atmosphere, it has become a home to more than 900 crypto companies. 

1. Bitcoin Suisse. This firm provides trading, custody, lending, staking, and other crypto services for private and institutional clients. 
2. Solana. Launched in March 2020, Solana also owns headquarters in Geneva, Switzerland. The official token of the network is SOL. 
3. Ethereum. Yes, the decentralized, open-source Ethereum blockchain with its ETH coin is based in Zug, Switzerland!
4. Tezos. It’s a self-upgradable and energy-efficient PoS blockchain that has the XTZ coin. 

Conclusion

Switzerland is one of the most crypto friendly nations around the globe. The beautiful city of Lugano is currently leading a country-wide movement to involve cryptocurrencies more and more in everyday transactions, which has materialized in more than a 150 crypto ATMs already active in the country and several merchants and service providers already accepting some cryptocurrencies as form of payment.

However, while the regulatory framework around crypto payments and crypto investments is adequate in general, you might encounter more favorable crypto tax regulations in other countries. You can additionally get acquainted with our articles about crypto regulation in Germany, South Korea, Brazil, UAE, Australia, Nigeria, Mexico, India, Russia, Vietnam and USA.