Dozens of mostly smaller companies in the cryptocurrency industry have settled in Switzerland in recent months. Now a prominent candidate of quite a different caliber is in the starting blocks: Bitfinex, one of the world’s largest crypto exchanges, wants to settle in Switzerland. Last December, as the recent boom in Bitcoin, Ether & IOTA trading peaked, the Asian stock market had already made nearly as much revenue as the London Stock Exchange.
IOTA definition: IOTA is a revolutionary new, next generation public distributed ledger that utilizes a novel invention, called a “Tangle”, at its core. The Tangle is a new data structure based on a Directed Acyclic Graph. As such it has no Blocks, no Chain and also no Miners. Because of this radical new architecture, things in IOTA work quite differently compared to other Blockchains. Read more about the IOTA Cryptocurrency and get the latest IOTA News.
The head of Bitfinex, Jean Louis van der Velde, confirms the facts: “We are looking for a new domicile for Bitfinex and the parent company iFinex, where we want to merge the operations previously spread over several locations.” There have already been several meetings with the State Secretariat for International Financial Affairs (SIF) and an exchange with Federal Councilor Johann Schneider-Ammann, the head of the Department of Economic Affairs.
Sales $ 110 billion
In technology-conscious circles, the settlement project meets with resonance. “It would be sensational if an actor of this size and importance should decide for Switzerland,” says entrepreneur and FDP Council of States Ruedi Noser. “It would show that Switzerland can indeed occupy a leading position in the entire blockchain industry.” Heinz Tännler, SVP Governing Council member of the Canton of Zug, says: “That would be a great signal if, for reasons of legal certainty, the stock exchange Switzerland would choose the compliance and tax situation. »
Bitfinex has established itself in recent years. In the trade between the dollar and the best-known cryptocurrencies Bitcoin, Ether and the IOTA Coin, it occupies rank 1. Measured by the total turnover of all new digital assets, it is the fifth strongest crypto-exchange in the world. “In the exceptionally good month of December 2017, Bitfinex generated sales of around $ 110 billion,” says the Bitfinex chief.
Transparency as an opportunity
If the plans become more concrete, Bitfinex will be located in Switzerland as AG and replace the former iFinex in the British Virgin Islands as the parent company of Bitfinex, said by settlement experts familiar with the matter. The legal and the finance departments would operate from Switzerland, but also the technical support and further development of the stock exchange platform would have their basis here. In plain English: The core of the company is to Switzerland. Born in Holland, van der Velde and other managers are also thinking of settling here.
In the wild-west phase of the IOTA price boom, one or the other stock exchange has had a bad reputation in recent years. Much was opaque in the unregulated environment for the market participants, the communication of the companies often lacking, lack of confidence. Obviously, Bitfinex is now moving forward: “We want to be the most transparent of all exchanges and meet the requirements of the Swiss regulator,” says van der Velde. Legal certainty in Switzerland and the transparency rules are both an obligation and an opportunity.
The role of Finma
In dry towels, the matter is not yet. This is related to the challenges faced by regulators and the Swiss financial market regulator Finma. For them too, the crypto-world is still new territory, and they have to assess under considerable time pressure how the partially new processes are to be assessed within the existing law and which licenses are necessary, for example. At the same time, Bitfinex-sized corporations need certainty and predictability before they abandon their tents elsewhere and move to Switzerland. For Bitfinex, legal certainty counts just as much as it does for customers. “Of course, the Finma should look carefully. That helps the whole industry. Switzerland needs good regulation. That’s also in the interests of the companies. That’s why they come to us, “says Noser. Where the stock exchange in Switzerland is, is still open. Train would be a possibility: “There is mutual interest,” says Tännler. But the process has just begun, and much is still open.
Parallel to Switzerland, Bitfinex is also looking at London as an alternative. But the preferences seem clear: “Switzerland is top of the list of jurisdictions we examine,” says van der Velde.
In addition to the known location advantages, the growing ecosystem around the Crypto Valley and its proximity to the IOTA Coin speak for Switzerland as well. There are talks with various Swiss banks about cooperation. Since the first exploratory meeting between van der Velde and SIF State Secretary Jörg Gasser, lawyers and location promoters are at work. In February, the Bitfinex boss finally met with Federal Councilor Schneider-Ammann in Bern. “The talks with the State Secretariat for International Financial Affairs and with Federal Councilor Johann Schneider-Ammann were very constructive,” says van der Velde.
Bitfinex in the industry trend
In the industry Bitfinex is regarded as a stock exchange with solid technology and a lot of know-how. But also Bitfinex had been hacked like other crypto exchanges where you can buy IOTA in the Pioneer phase and lost thus in 2016 about 72 million dollar. At the time, Bitfinex put promissory notes into the custody account for the damaged customers with the promise of repurchasing them with the proceeds from the current business and thus compensating the customers. This was achieved faster than expected, thanks to rapidly increasing activity and thus rising fee revenues. Eight months after the hack, the rescue operation was completed.
Bitfinex is not the only exchange that is pushing into the regulated environment and wants to be completely compliant. For example, the US Bittrex stock delineates dozens of coins these days that could be taxed by US regulators as securities. The pioneer Poloniex, in turn, recently bought up from the US company Circle, which is in direct contact with Goldman Sachs. That, too, is a way of getting closer to the established financial world. In turn, the highest-volume Exchange Binance is now settling on Malta, and thus at least within the European Union’s sphere of influence.
Suction effect in sight
The love of the crypto exchanges with a IOTA wallet is thus flared up between the location promoters. Obviously, Switzerland is not only highly rated by Bitfinex. In the last three weeks, several exploratory inquiries have been received at Crypto Valley in Zug. These included exchanges – some smaller ones – from Asia, Europe and Central America.
For this reason, many location promoters hope for the Google effect: If Bitfinex settle in Switzerland, it should have the signal effect and let the still young ecosystem continue to grow. Just as the move from Google to Zurich once made the region more attractive for other companies. “Bitfinex in Switzerland – that could have a suction effect,” says Tännler.