Monthly Archives

September 2017

CVA member Wenger & Vieli publishes Swiss Law Perspective on token launches

By | Member News

With the recent rush to Initial Coin Offerings (ICOs) or Token Generating Events (TGEs), questions have arisen about compliance with existing capital market regulations. Are they, in fact, new ways for start-ups to more easily raise funds or are they newfangled ways to avoid the existing regulatory burden hiding behind crypto’s shiny new cloak?

CVA member firm Wenger & Vieli recently published a note with their view on the Swiss perspective. In it, the law firm concludes:

“ICO/TGE is a new form of contributing to or investing in start-ups. Due to the diversity of Tokens, general qualifications cannot be made and each Token has to be assessed on an individual basis.”

For more, see the Wenger & Vieli Spotlight newsletter.

As announced in the CVA’s statement on token launches, the CVA is in the process of developing a TGE code of conduct with input from experts and the community.

CVA token launch statement in the press

By | Public Announcements

Last Thursday the Crypto Valley Association released a statement on token launches and also announced that it was developing a token launch Code of Conduct in conjunction with leading experts.

Considering the amount of attention that token launches, also known as token generating events (TGEs) or, more commonly, ICOs, have been getting, it was no surprise that the announcement garnered widespread coverage in the industry press. Notices ran in Coinspeaker, Bitcoin News and CoinTelegraph, among others.

Mainstream interest

The strong growth in TGE volumes, and the increased regulatory scrutiny, has however made this a topic in the mainstream media as well.

On the day of the release of the CVA statement, the Financial News ran an in-depth article featuring CVA President Oliver Bussmann. Among other things it quoted Bussmann as saying the “worst case scenario would be that regulation could shut down the whole ICO industry” and that it “is our mission to educate and provide a reliable framework for ICOs.” The article concluded:

“The code of conduct being drawn up by the Crypto Valley Association will allow companies looking to raise money using cryptocurrencies to gain “a trusted level of certification”. Companies that sign up to it will need to have credible business models and conduct proper background checks on their customers and counterparties.”

Token launch regulation around the globe was also a topic for The Guardian and Reuters, which both recently posted articles with quotes from CVA President Bussmann.

On September 7, Swissinfo ran an excellent in-depth piece on cryptocurrency projects, token launches and Swiss-based foundations. It featured quotes from both Bussmann and David Siegel, founder of CVA member 20/30, one of whose projects, Pillar, recently raised over USD 20 million in a TGE.

Crypto Valley Association Comes Out in Support for Careful ICO Regulation; Announces ICO Code of Conduct

By | Public Announcements

Zug, Switzerland, September 7, 2017 — Crypto Valley Association (CVA), the Swiss-based not-for-profit association supporting the development of blockchain and cryptographic related technologies and businesses, today announced support for careful regulation and best practices for Initial Coin Offerings (ICO). The announcement describes the development of an official, CVA-supported ICO Code of Conduct, a framework designed to guide ICOs on proper conduct, taking into account all legal, moral, and security obligations. The ICO Code of Conduct is expected to bring clarity and confidence towards a new, rapidly-growing asset class.

Oliver Bussmann, President of Crypto Valley Association said: “With the explosion of innovation surrounding blockchain and cryptocurrency technologies, it is unsurprising that organizations are leveraging similarly innovative financial instruments to raise capital. Thanks to their simplicity and popularity, the number of token launches has increased rapidly in recent months, with over $1.6 billion USD raised in 2017 alone.”

“However, this growth in popularity has caught the attention of regulators worldwide, who wish to protect participants by clarifying the exact function and legal and tax status of the tokens. In addition, investors are often unaware of the true nature of their investment, and the documentation published to accompany token launches often minimizes or ignores the associated risk,” added Bussmann.

Headquartered in the Swiss canton of Zug, Crypto Valley Association is the independent, government-supported association established to take full advantage of Switzerland’s strengths to build the world’s leading blockchain and cryptographic ecosystem, working with government to foster the development of pioneering digital technologies in Switzerland and internationally. To date, four of the five largest token sales recorded have been completed by companies based here in Switzerland, attracting combined investment in bitcoin and ether of over $600 million USD.

“The Crypto Valley Association fully supports innovation in the blockchain space. We believe that token sales represent an exciting, sound and innovative approach to raising investment capital. Therefore, we believe Switzerland should support this trend by developing clear, comprehensible, yet flexible regulation that clarifies the legal status of ICOs and the tokens generated,” added Bussmann.

In the statement published today, CVA announced the development of an ICO Code of Conduct, aimed at providing companies with a framework outlining their legal and moral obligations, providing ICO participants with a thorough understanding of the risks involved.

“The rapid development of token launches has raised concerns around stability and security, and as a leader in this field, it’s our responsibility to support the industry. The widespread adoption of this framework, combined with careful supportive regulation would bring stability to an exciting but uncertain trend in blockchain,” concluded Bussmann.

The ICO Code of Conduct is being drafted by a multidisciplinary team with expertise in legal, tax, accounting, cybersecurity, and communications, among other disciplines. From an initial tally of 12 at launch, the Crypto Valley Association now counts over 220 corporate and individual members. Prominent new joiners include Swisscom Blockchain (a newly founded company of Swisscom, Switzerland’s largest telco), SUVA (the Swiss national accident insurance fund), as well as Alpere, Blockhaus, Deon Digital and SingularDTV.

Crypto Valley Association Statement on Token Launches

By | Public Announcements

With the explosion of innovation surrounding blockchain and cryptocurrency technologies, it is unsurprising that organizations are leveraging similarly innovative financial instruments to raise capital. Token launches, commonly known as ICOs (initial coin offerings), are a popular new strategy where organizations sell a limited number of bespoke digital tokens to the public, usually in exchange for cryptocurrencies such as Bitcoin or Ether.

Thanks to their simplicity and popularity, the number of token launches has increased rapidly in recent months, with no sign that this trend is slowing. Switzerland has established itself as the premier location for token launches; four of the five biggest launches have been based here, raising bitcoin and ether worth a combined total of over US $600m.

The Crypto Valley Association (CVA) fully supports innovation in the blockchain space. However, rapid development of token launches has come at the expense of the traditional support structures which usually accompany such instruments. Token launches are largely unregulated, because the exact function and legal and tax status of such tokens is unclear. Investors are often unaware of the true nature of their investment, and the documentation published to accompany token launches often minimizes or ignores the associated risk.

At the same time, the publicity surrounding token launches has made them a target for criminals, with multi-million-dollar hacks occurring monthly. In the rush to launch, many organizations have failed to provide adequate security to ensure investors’ transactions proceed safely and smoothly. In addition, a small minority of unscrupulous organizations appear to be capitalizing on the current excitement, raising investments for projects they are unable to or do not intend to complete. These factors combine to create a large risk of negative publicity. This could seriously damage investors’ impressions of token launches and the wider blockchain industry.

The CVA is fully convinced that, in the long-term, token launches are a sound, innovative approach to raising investment capital. Switzerland should support this trend by being the first country to recognise and support these tokens and token launches. This will foster an environment that encourages blockchain and related companies to establish themselves here, bringing jobs to the region and providing investors with the clarity, confidence and security they need.

This should be achieved with clear, comprehensive yet flexible regulation that clarifies the legal status of token launches, tokens and the investments made therein.

We also believe the industry would benefit from a clear code of conduct surrounding token launches, to help companies fulfil their legal and moral obligations and give investors a clear understanding of the risks involved.

To this end, the CVA and its members have begun a project to draft such a code of with the help of a multi-disciplinary team from the fields of law, tax, accounting, cybersecurity, communications, and more.

The CVA hopes the widespread adoption of this code of conduct, combined with careful and supportive regulation, will bring stability to an exciting but uncertain trend in blockchain, and encourage an influx of jobs and investment to Switzerland.

Edit: January 9th, 2018.  The Code of Conduct mentioned in the article above has now been published and is available at: http://cryptovalley.swiss/codeofconduct/

Blockchain Competition Attracts Applicants from over 25 Countries Worldwide

By | Public Announcements

This fall, there is going to be worldwide attention focused on Crypto Valley.

The Blockchain Competition, initiated by two of the Crypto Valley Association’s founding members – Lakeside Partners and inacta – has collected over 90 entries from teams and startups spread across more than 25 countries worldwide. The Competition is a first-of-its-kind startup contest for blockchain teams working on insurance applications and offers a cash prize of $100 000 (no strings attached).

From Russia to Uruguay, from Singapore to Spain, the list of contestants vying to claim the top prize and come to Zug knows no borders. The Top 3 teams – including the winner of the cash prize – will be announced in a special Award Show on 22 Nov in Zug’s Theatre Casino.

The applications which have been received so far, include both established startups and teams formed specifically for the purpose of applying to the Competition. The majority of entries have come from European countries and North America. Submissions from Africa (2) as well as India (3), not to mention the UAE and Uruguay, can attest to the potential that blockchain holds for developing countries.

With this many applications having come in from around the world, there will be even more attention focused on the growing blockchain ecosystem in Switzerland.

Mathias Ruch, Managing Partner of Lakeside Partners sees both positives and negatives in the wide range of international applicants – “It’s awesome to see ideas popping up from all over the world. We already knew that Switzerland and Crypto Valley are the top spots for blockchain startups and this confirms it. But now our Jury will have a difficult task narrowing things down. It’s too bad we can’t take them all and give them a home here!”

That task will likely get even more difficult. The Blockchain Competition will continue to accept late applications until 22 September, increasing the pool of potential winners.

For those interested in getting a sneak peak at some of the Competition’s applications, there is the “Building Blocks” Interview Series with  the first edition featuring ZirconTech from Uruguay.

 

Tickets for the Blockchain Competition Award Show are available here.

Crypto Valley Labs Genesis Hub Launched in Zug

By | Member News, Public Announcements

CVA members Lakeside Partners and MME Legal, together with Blockhaus have announced the launch of Crypto Valley Labs – a fully-digitalized, fully-tokenized co-working space – with its first location (Genesis Hub) in Zug.

The Labs will serve to give startups a physical place to work from in Zug – and also help support the local economy which – so far  – has not benefited greatly from the crypto boom.

Besides its initiators, the initiative is supported by its current Genesis Members – including Singular DTV, Bancor, Etherisc and Melonport.  Several local businesses such as Grunder Law, Fineac Treuhand and Brand Leadership Circle have also joined the Crypto Valley Labs in order to take advantage of early access to the fast-growing ecosystem.

Teams operating from the Labs will be able to take advantage of a range of services – even if team members are split between two or more hubs in different cities. These include marketing, legal and development support in addition to using shared desks and office space. Teams will also be able to access attached living facilities while they use the Crypto Valley Labs co-working space.

“We like to think of it as co-working meets crypto,” explains Mathias Ruch, Managing Partner of Lakeside Partners. “Talented teams may be everywhere in the world, but ideas only really come to life when people get together and feed off each other. It really does take an ecosystem to make something great.”

Read more (in German) here.

Crypto Valley Labs website: www.cryptovalleylabs.com

CVA Board Member Soren Fog Speaks at Russian Blockchain Conference

By | CVA in the News

On September 1st, Soren Fog – a member of the CVA board and founder of blockchain startup iProtus – travelled to Tatarstan to speak at the “Blockchain: the New Oil of Russia” conference.

Mr Fog’s speech concentrated on the experience of working with the local Crypto Valley community, organising the local meetups through the Crypto Valley Forum and helping set up the Crypto Valley Association.

He also committed himself to pursuing cooperation between Swiss and Russian organisations to pilot blockchain projects in a number of areas.

Read the press release here.