Switzerland is considered one of the highest-earning countries globally and one of the most friendly towards cryptocurrency. So it should be no surprise that the Swiss fintech sector has created some of the best cryptocurrency management solutions for global investors.

What is a cryptocurrency custodian?

Investors who have a small amount of cryptocurrency in the various options for personal wallets, accessing their crypto easily to trade and spend. At a certain point, however, they may earn more than they can safely hold in their wallet without concern of security. These investors look to custodians for the solution. The need for a custodian comes from the lack of access to “regular” banking solutions traditional banks offer. Cryptocurrency custodians are storage and security systems that are utilized to manage large sums of cryptocurrency. There are a few different custody options, such as hot and cold storage. Each solution offers its own benefits, and a custodian can work with clients to determine the best solutions for them. In addition, custodians are used frequently by institutional investors like hedge funds that need to manage a high quantity of Bitcoin and other crypto tokens.

Like traditional banking, some countries offer higher quality services than others. For example, Switzerland is highly regarded for being crypto-friendly and offering elite services for digital investors.

Why choose Switzerland for cryptocurrency custody?

Before we show why Switzerland offers excellent cryptocurrency custody, we must note the country’s economic success. Switzerland has a deep history of economic strength, high GDP per capita, and provides asset management solutions for traditional and alternative investments for investors worldwide. When cryptocurrency was introduced into the world’s economy, the Swiss government embraced its innovation and potential to bolster its citizens’ financial success. Unsurprisingly, the Swiss financial sector took solutions into their own hands. One group has even developed the Capital Markets and Technology Association (CMTA) that sets a standard for digital tokens and crypto. This is a milestone for the way cryptocurrency is developing and becoming almost ubiquitous.

While many nations like China and South Korea have banned initial coin offerings or some crypto completely, Swiss officials want to see the ICO market prosper while also keeping up the standards and integrity of the financial markets. Initial Coin Offering, or ICO, is like an IPO for cryptocurrency. When a new digital currency is developed, money is needed to fund it. Those who invest are hoping the currency will gain a lot of traction and raise the price of the coin.
The financial authority, FINMA, believes there are economic opportunities in the digital currency startups. There is an ICO working group that is working to increase legal certainty, protect existing financial centers, and ensure tech-neutral regulation. Further, the country is also home to the “Crypto Valley” project, one of the world’s leading ecosystems for crypto, ledger technologies, and blockchain. Many successful ICOs have come from Switzerland. Emerging digital pioneers have created this crypto hub near Zurich in Zug, formed by wealthy investors and technology specialists, and it has been more than successful. Roughly five to ten times a day, the Crypto Valley industry association will receive inquiries from global startups asking about Swiss ICO.

Rules, Regulations, and Taxes

The nation’s monetary authorities have accepted cryptocurrency with open arms. They are even encouraging all kinds of Bitcoin and cryptocurrency activity such as mining, trading, and ICOs, unlike many other economic centers. They have fully realized the potential that blockchain and ledger technology holds. Moreover, offering and selling cryptocurrency is not subject to Swiss sales regulations.

Switzerland, known for wealth management and a strong currency, is also considered an “unofficial” cryptocurrency tax-friendly nation. Cryptocurrencies aren’t viewed as foreign currency or a financial supply for GST, so there are not a lot of taxes to be paid depending on the canton. In the context of capital gains tax, cryptocurrency is classified as an asset, which only applies to an individual who is considered a professional trader. Professional traders have to report the coins as income from self-employment. Holders and investors of digital currencies are subject to a wealth tax. The rate of this tax is decided by tax authorities at the end of the fiscal year. Holders must declare the coins in their annual tax return with their other assets. There is also potential for wealth tax and other taxes. Every canton is different.

When it comes to holding large quantities of cryptocurrency and taxes, it is highly recommended to rely on the assistance of a tax professional. Tax laws and regulations surrounding cryptocurrency are relatively new. It’s better to be well prepared than find out you are not compliant.

Alpen Partners and Cryptocurrency

If we take a look at the financial success of Switzerland combined with its friendly views of cryptocurrency and developing digital service infrastructure, it is easy to see why Switzerland makes a perfect cryptocurrency custody jurisdiction. At Alpen Partners, we have strong relationships with leading financial institutions, such as private banks and cryptocurrency management companies. With these partnerships, we can offer full digital asset management solutions. We work with high-earning clients to find the solutions that are best for you. We will examine your digital asset needs and work for hand in hand to find the institution and storage options for them. Not only can our experts create a cryptocurrency portfolio used to grow your wealth or hedge your other assets, but we can also help with investments of all kinds, whether it’s in Switzerland or another economic hotspot. Contact Alpen Partners to find your crypto custody solutions.