The U.S. blockade is well-known is compliance circles, with several private banks retreating from plans to push into the space, according to several people familiar with the matter. None of the banks asked by finews.com commented on whether they had pulled away from crypto plans.

Once Bitten...

It isn't immediately clear why U.S. banks are pressuring their Swiss counterparts on crypto, but U.S. regulators said recently they would treat coins as securities – effectively, the same as stocks and bonds. But officials also deferred some oversight to individual states, meaning the U.S. hasn't yet fully clarified its position on tokens.

U.S. correspondent banks may want to spare themselves potential regulatory headaches down the road, by not accepting any dollar-based transactions linked to ICOs. Switzerland's banking industry is also once bitten, twice shy following a wide-ranging U.S. crackdown on Swiss banks for helping American tax dodgers and cheats. With total fines and penalties topping $10 billion since 2007, Swiss banks are understandably wary of angering U.S. officials again.

...Twice Shy

Bitcoin Suisse board member Luzius Meisser confirmed the problem to finews.com, but he also identified an unwillingness by banks to take risks. «U.S. correspondent banks can only veto U.S. dollar transactions,» Meisser said. «What is to prevent Swiss banks from providing ICO services in Swiss francs, as well as in cryptocurrencies like bitcoin und ether,» he noted.

While Swiss banks' general reluctance is understandable the recent U.S. wrangling, Liechtenstein's Bank Frick has shown how to build a lucrative business with crypto and blockchain start-ups.

Banks Seek Certainty

«In principle, nothing prevents Swiss banks from taking ICO funds from a regulatory point of view,» compliance experte Juerg Baltensperger toldfinews.com. The challenge is to «adapt existing regulation to the new risks from cryptocurrencies, ICOs, and blockchain technology in a way that still enables innovation,» he said.

But finance hubs like Malta and Liechtenstein has proven nimbler at this, as Zug's finance director Heinz Taennler (pictured above) noted. He advocated for Swiss regulators to provide legal certainty to banks in Switzerland on cryptocurrencies and tokens as soon as possible, in comments to «Financial Times» (behind paywall).

Migration Feared

«The clock is ticking», Taennler told finews.com. «It would be painful for Zug's reputation if start-ups were to leave because they cannot get access to domestic banks.»

Switzerland's government, which signaled a receptive stance on tokens earlier this year has launched a blockchain task force under Mark Branson, the head of financial regulator Finma. The group is expected to provide specifics by year-end.

Specifically, the Swiss Bankers Association and Finma are compiling a checklist for banks dealing with cryptocurrency providers, Taennler said. The move is meant to give legal assurance to finance firms. The blockade by U.S. correspondent banks could amount to mere scare tactics that Swiss banks can counter with a spirit of innovation and the willingness to take a bit more risk.