- The Swiss Central Bank has denied a 100 million-franc ($103 million) coronavirus bailout for Swiss cryptocurrency companies
- Zug’s finance director had tried to secure extra funding for Crypto Valley startups in addition to the $158.6 million credit facility already established
- 80% of blockchain startups are at risk of imminent bankruptcy
A 100 million-franc ($103 million) coronavirus bailout for Swiss cryptocurrency companies has been denied by the Swiss Central Bank. The bank has already established a $158.6 million credit facility for all fintech startups, but the finance director of Zug, known as Switzerland’s Crypto Valley because of the high concentration of blockchain startups there, had said that what is on offer isn’t enough to help the companies there survive. The bank has disagreed however, and the request has been rejected, meaning that the companies in the area will have to do their best with the funds already allocated.
80% of Swiss Crypto Firms at Risk of Imminent Bankruptcy
Zug’s finance director Heinz Taennler had put the case for a coronavirus bailout just for cryptocurrency firms in April, stating that the existing credit facilities were not enough to help the cryptocurrency companies survive. To bolster his case he had highlighted a Swiss Blockchain Federation survey of 203 blockchain firms in the country that had found that 80% were at risk of imminent bankruptcy, with only half of the top 50 companies in the Crypto Valley expected to last another 12 months.
The Crypto Valley caters for more than 800 companies and employs over 4,000 people, meaning that a large number of jobs are at stake.
Swiss Authorities’ Benevolence Has Limits
Zug emerged as cryptocurrency’s version of Silicon Valley in 2017 as cryptocurrency boomed, with venture capitalists pouring money into companies in the region, but this money has dried up as the blockchain space has contracted from 2017’s highs and the ‘crypto winter’ has hit home. The Swiss authorities have tried to help the region where it can in the past by relaxing laws to attract new blockchain startups, but their rejection of a separate coronavirus bailout for cryptocurrency firms shows that their benevolence has limits.
