How will the new regulatory regime in the EU affect the Swiss market for crypto-assets and related services? This question, explored in a conference co-hosted by finews.com and Liechtenstein Finance earlier this month, was a key topic at the Finance 2.0 2024 event held in Zurich's Kaufleuten, adhering to the traditional in-person format.

Effective early 2025, the Markets in Crypto-Assets Regulation (MiCAR) will be the decisive legislation for the crypto industry across the EU, encompassing crypto-assets and their service providers, excluding security tokens or non-fungible assets (NFTs).

National Implementation Matters

Jürg Baltensperger, Managing Director of JayBee and moderator of the regulatory panel discussion, queried initial perspectives on MiCAR from the participants. Hans Kuhn, Partner at Lawside, acknowledged MiCAR as a robust framework but noted it presents a new hurdle for Switzerland. MiCAR does not include an equivalence principle, meaning proof of comparable domestic regulation won't assist in the licensing process.

Lucas Betschart, CEO & Co-Founder of 21 Analytics, expressed skepticism regarding uniform MiCAR implementation across all EU states, contrary to the legislator's intentions. Tina Balzli, Partner & Global Co-Head of Crypto, Fintech & Digital Assets at CMS, viewed MiCAR as not particularly innovative. Stephanie Wickihalder, Deputy CEO of the Liechtenstein Bankers Association & President of Swiss Fintech Innovations, emphasized that while good regulation is essential, effective implementation is key.

Who Will Secure the First MiCAR License?

The successful implementation hinges on each EU member's strategy towards the crypto industry. Nations viewing potential for their financial centers and economies are adopting a more open stance. They are also ensuring that their national regulatory authorities possess the personnel resources and expertise to handle crypto companies' concerns effectively and promptly.

The outcome of national implementation (and the quality of preparatory work) will determine which company will be granted the first MiCAR license in early 2025. This licensee will not only be the first to offer crypto services across the entire EU under this framework but will also gain significant prestige.

A Nudge Towards Bern

EU countries with such ambitions mentioned in the panel discussion included the Netherlands, Luxembourg, Germany, and Austria. This competition in implementation is positive for the industry, allowing it to benefit from regulatory harmonization while still fostering competitive dynamics. There was general agreement that MiCAR will be more comprehensive and detailed than prevailing regulations in Switzerland.

Kuhn also provided a gentle nudge towards Bern, suggesting doubts about MiCAR's compatibility with the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO). He recommended that Switzerland should take appropriate steps in case of treaty violations.

Milei's Role as a Crypto Protagonist?

It became clear that the rest of the world isn't waiting idly for MiCAR to come into force but is actively wooing the crypto industry. Kuhn mentioned Hong Kong's current openness in this regard. Betschart highlighted another country with potentially presidential ambitions to become an international hub: Argentina under Javier Milei, known for his support of currency competition principles and as a Bitcoin enthusiast.

Even for those not primarily interested in regulation, Finance 2.0 offered something of interest. Three banks showcased how they are integrating cryptocurrencies into their offerings. Lucerne Cantonal Bank, for instance, launched its offering and accompanying app for retail customers as recently as March, making it only the third cantonal bank to do so.

Serge Kaulitz, Head of DLT/Blockchain, underscored the considerable preparation and persuasion efforts required until these offerings came to fruition.

Breaking Through with PostFinance's Scent

Konstantinos Ntefeloudis, Head of Investment Management at Maerki Baumann, presented a case study demonstrating the significant optimization of return-risk behavior in a conventional portfolio by including cryptocurrencies to the extent of 2%.

Alexander Thoma, Head of Digital Assets at PostFinance (which has been offering cryptos since February), captivated the audience with a humorous presentation. Facing challenges where customer education content was filtered or blocked on modern electronic media, PostFinance ingeniously created a «crypto scent» perfume using AI. This limited-edition perfume, similar to the total Bitcoin supply, proved sufficiently captivating to subdue the filters and effectively convey its message.