Crypto Valley Roundup – Early 2022



The Crypto Valley is known to be one of the most “crypto-friendly” regions in the world. But what specifically is happening within the Blockchain ecosystem? The “Crypto Valley Roundup” aims to provide insight and highlights from selected events every two months.

With the first Blockchain companies settling in the area of Zug from 2013 onwards, the term “Crypto Valley” was soon born in reference to the “Silicon Valley”. Thanks to politics and regulation, Switzerland was able to create the necessary legal certainty for a flourishing ecosystem around Blockchain and cryptocurrencies at an early stage.

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The local regulator has been active since 2015. Internationally, this is very early for the Blockchain space. Last but not least, the space has enjoyed new company settlements and steady development. The ecosystem has advanced into various industries and the Crypto Valley has also grown geographically far beyond the canton of Zug. So it’s high time to take a closer look at what’s going on.

Lugano competes with Zug as Swiss blockchain hub

After Zug, the second Swiss city has declared Bitcoin as a legal tender. Lugano, on the one hand, allows its citizens and businesses to pay fees for public services and taxes in Bitcoin. On the other hand, the city wants to support crypto companies and facilitate payments. City Manager Pietro Poretti announced this impressive move at an event together with Mayor Michele Foletti and Paolo Ardoino, CTO of leading stablecoin issuer Tether.

The city mayor and Tether’s chief technology officer signed an agreement for a four-year collaboration to applause from the Lughanesi in the packed Palazzo dei Congressi. He said the city is already working with more than 200 merchants to advance the adoption of Bitcoin and Lightning payments. In addition, the collaboration aims to establish the stablecoin Tether (USDT) and the city’s own token LVGA as legal tender.

Crypto Valley records strong growth again

Both the number of companies and jobs in Crypto Valley continue to grow at a significant pace. The increase has been fueled by new companies establishing themselves in Crypto Valley as well as the expansion of the presence of existing players. Both developments are encouraging, according to the latest edition of the CV VC Top 50 report, as they show that the legal environment in Switzerland is very attractive and that qualified employees are available in the market.

The number of companies in Crypto Valley surpassed the 1,000 mark for the first time, growing to 1,128 at the end of December 2021, an 18% increase in comparison to the previous year. Growth has been driven in a wide variety of sectors, such as the establishment of new protocols, subsidiaries of major financial players, and many other areas. The employment numbers of the top 50 companies in Crypto Valley also grew significantly. Overall, the number of employees in Crypto Valley grew to over 6,000 at the end of 2022, a 16% increase from December 2021.

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Successful funding rounds for two crypto banks

In August 2019, SEBA Bank became one of the first financial service providers in the digital asset sector to receive a banking license from the Swiss Financial Market Supervisory Authority (FINMA). In the second week of January, the crypto bank successfully closed a Series C financing of 110 million to ensure accelerated growth, including in the international market, and continued expansion of its digital asset offering.

Competitor Sygnum raised $90 million in a Series B just a week earlier. The company also intends to accelerate the expansion of its Web 3.0 offering and the development of new global markets. The funding round was led by Sun Hung Kai & Co. Limited, a financial services company listed on the Hong Kong Stock Exchange. These developments underscore the great appetite for companies that build bridges between the traditional and decentralized financial worlds.

Swiss National Bank continues CBDC experiments

Digital central bank currencies (CBDCs) are becoming a hot topic internationally. Both the European Central Bank (ECB) and the Federal Reserve Bank have announced clear plans. For some months now, the Swiss National Bank (SNB) has also been looking into the matter. A study by the central bank examined what advantages and disadvantages the issuance of a blockchain franc would entail.

In the first quarter of the new year, the SNB also published new findings on the topic of CBDC. It said the issuance of a digital franc is operationally possible in cooperation with established major banks and is permissible under Swiss law. A CBDC for financial institutions (wholesale CBDC) would be considered the most popular proposal among central banks, as it has the potential to make existing financial systems faster, cheaper and safer.

SEBA Bank, a fully integrated digital asset banking platform approved by the Swiss Financial Market Supervisory Authority (FINMA), announced the launch of its gold token – a regulated digital token for investing in and delivering physical gold – just before the end of the year. The token is designed to provide low-cost access to precious metal and set a new standard in the stablecoin sector.

Unlike traditional gold derivative investment products such as ETFs and OTC contracts, a gold token allows investors to redeem their physical gold at partner refineries at any time, avoiding costly transportation and storage fees. In addition to the physical redeemability of value, the gold token could also be used as a stablecoin. So far the space has been dominated by dollar-backed tokens.

 

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