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CVA in the News

EXPERTsuisse issues first Swiss ICO accounting guidelines for utility tokens

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By Markus Vogel – Chair, Crypto Valley Association Working Group Tax / Accounting / Structuring & Tax Partner at KPMG Switzerland

With the release of the Q&A on special accounting topics (Accounting of ICO’s with Utility Tokens) by EXPERTsuisse the very first Swiss accounting guidelines for the issuance of utility tokens have been established. This constitutes a remarkable milestone achievement in the midst of the so called “Crypto Winter”.

EXPERTsuisse, the Swiss Expert Association for audit, tax and fiduciary practitioners, has mandated its Accounting Standards Committee to establish the very first Swiss ICO accounting guidelines for utility tokens in close collaboration with the CVA Working Group Tax / Accounting / Structuring.

The result of this fruitful collaboration is the Q&A referred to above.

In parallel, KPMG Switzerland, Strategic Partner of the CVA, has also edited an article (in German) in EXPERT FOCUS covering the publication of the Q&A.

It can be accessed here.

What’s the relevance of the Q&A?

The new ICO accounting guidelines for utility tokens revise the currently widely applied and tax driven practice of the „provision model“. Under the provision model any kind of proceeds originated in token sales / ICO activities are recognized as taxable income resp. revenue. However, this taxable income is offset by a provision in the same amount. In turn, corporate income taxation of ICO proceeds is deferred until the ICO project completion.

After having reviewed the current practice from a Swiss accounting perspective, it has been found that there are several inconsistencies with general accounting principles which need to be addressed.

What are the new guidelines?

The new ICO accounting guidelines are illustrated in the Q&A at hand of a simplified, but still representative case study named “Open.” Open engages in the development of an open-source blockchain protocol. In case of a successful delivery of the protocol, the ICO participants shall be entitled to partake in the allocation of the genesis block.

The new ICO accounting guidelines for utility tokens closely follow the accounting principles for long-term manufacturing orders under Swiss GAAP FER 22/3 and are also in line with the Swiss Code of Obligations. Although there is usually no legally enforceable contractual relationship, the public announcement of the development of the platform within the whitepaper is sufficient to assume a factual obligation. Hence, the respective ICO company has the implicit order from the token purchasers to put sincere efforts into the development of the respective decentralized platform. These efforts are considered to be financed at hand of so called advance payments without repayment obligations.

Since it is assumed that the prerequisites for the application of the usual “percentage-of-completion-method” are likely not fulfilled, any proceeds from an ICO project needs to be recognized as revenue in the amount of expenses directly attributable to the ICO project in a given fiscal year without disclosing any profit element.

Having said that, any expenses directly attributable to the ICO project can be deducted from the received advance payments (without repayment obligations) which are considered as liabilities in the balance sheet.

As a consequence, any “excess advance payment amount” at the end of the development phase of the decentralized protocol shall be recognized as revenue respectively profit. In case, it becomes evident that the raised financing is not sufficient to cover all development expenses for the ICO project, a so-called contingency provision needs to be booked. Reflecting on the outcome under the new ICO accounting guidelines, the profit recognition for accounting and tax purposes still corresponds to the timing under the provision model.

Besides the above-mentioned changes, the new ICO accounting guidelines for utility tokens have also specified the accounting treatment of own token reserves (from genesis mining). They stipulate that any own token reserves need to be priced at historic production costs in the financial statement of the respective ICO company since a market price valuation appears to be inappropriate.

Final remarks

As outlined in the beginning, today’s publication of the Swiss ICO accounting guidelines for utility tokens is an outstanding achievement and emphasizes the uniqueness of the ecosystem Crypto Valley and all Switzerland can offer to anyone working on the break-through of this great emerging technology.

The Accounting Standards Committee and the CVA Working Group Tax / Accounting / Structuring continue their productive collaboration and have already started working on the respective accounting guidelines for asset tokens.

 

Zug citizens open to more blockchain-based e-voting

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Nearly eight in ten of respondents in Zug welcome e-voting secured by blockchain technology 

Zug, SWITZERLAND — November 30, 2018 — Most residents of Zug, Switzerland, approve of e-voting secured by blockchain technology as it makes voting quicker and easier than traditional ballots, according to those who participated in the country’s first ever blockchain-based e-vote last summer.

The City of Zug, Hochschule Luzern’s Blockchain Lab, and Luxoft, today jointly release a report evaluating the results of the e-vote in Zug. The report highlights the benefits of decentralized voting, outlines the underlying architecture of the blockchain-based system and analyses the experience of residents who participated in the vote.

More than 220 people in Zug have a registered digital ID and were eligible to vote on the platform, and nearly 100 responded to the survey carried out by the City, following the blockchain-based municipal vote on June 25 and July 1.[1]

The findings reveal that most residents welcome the prospect of more blockchain-based e-votes; 79% welcome the use of e-voting in the city, with just 2% opposed to it. Moreover, 52% agree that e-voting should be introduced to make voting easier and quicker than filling out a ballot. Despite the high level of approval amongst residents, some remain skeptical about the security of e-voting.  While 21% believe blockchain technology makes electronic voting more secure, 16% have security concerns.

The voters praised each element of the voting solution built by Luxoft, from verification to the use of private keys.  Many voters noted that not enough had been done to raise awareness of the voting trial to boost participation. This is reflected in the fact that of the residents that took part, 75% already owned a digital ID and only 25% needed to acquire a digital ID to vote. Residents therefore accept that the option to vote by mail in addition to e-voting is still needed today until further progress is made.

Zug’s city president, Dolfi Müller, welcomed the feedback and commented, “It is nice to see that, despite some minor difficulties, many people in Zug are happy to live in such an innovative community and look forward to further research and development in the field of digital ID and blockchain technology.”

“It’s clear from this report that voters in Switzerland today recognize the value in using a blockchain-based e-voting system,” said Vasily Suvorov, Luxoft’s Chief Technology Officer. “While the technology that underlies this system is extremely complex, residents agreed that the platform was simple and practical to use. This is a platform that makes it easy for people to interact with blockchain on an everyday basis.”

Dr. Alex Denzler, head of Hochschule Luzern’s Blockchain Lab concluded, “There is still more progress to be made before we see such systems implemented globally. All the partners integral to expand the blockchain-based e-voting system continue to collaborate so it can become an established, reliable solution for voters everywhere.”

 

[1] There are 220 residents in Zug with digital identities. 72 took part in the vote between June 25 and July 1, and 95 responded to the city’s survey after the vote to provide feedback on e-voting secured by blockchain technology and the voting process.

CVA Statement on Swiss Banking Association Guidelines

By | Articles, CVA in the News

Swiss Bankers Association – with support from the Crypto Valley Association – has developed guidance for Swiss banks opening bank accounts for crypto & blockchain companies.

The Crypto Valley Association (CVA) welcomes the issuance of new guidance from the Swiss Bankers Association (SBA) to its members, regarding the treatment of blockchain-based companies in the country. The new guidance directed to member banks of the SBA is intended to provide increased clarity and assurance and remove barriers to the growth of the Swiss blockchain ecosystem.

The guide, an initiative of the SBA and developed with the input and assistance of the CVA Regulatory Working Group, makes key distinctions between blockchain-focused companies seeking to raise capital through an Initial Coin Offering (ICO) and those who do not. According to the outline, companies which do not fundraise through an ICO should be treated no differently than regular Small Medium Enterprises (SMEs). Further distinction regarding documentation needed is made between ICOs carried out with fiat currencies and those using cryptocurrencies. The guide has been welcomed by FDF, the Federal Department of Finance, and FINMA, the Swiss Financial Market Supervisory Authority.

Oliver Bussmann, President of the Crypto Valley Association, welcomed the announcement, saying “We have seen a lot of positive growth in the ecosystem over the past 18 months and now it was very important that the SBA, CVA and authorities could come together and successfully work on a solution that can ease some of the restrictions that could hamper the continuation of that growth.”

Dr Mattia Rattaggi, who chairs the CVA Regulatory Working Group, added, “This guide is an important and timely contribution. As a multi-stakeholder organization it was important for us at the CVA to bring a diverse range of perspectives and expertise to the table for the development of these guidance and we hope that it will benefit the healthy advancement of the crypto/blockchain industry in Switzerland.”

Switzerland has gained a world-wide reputation as a popular destination for crypto and blockchain companies. In 2017, four of the ten largest ICOs were conducted in Switzerland. In 2018 the country continues to rank among the most attractive places for blockchain companies.

Read the SBA announcement here.

CVA and PwC Strategy& Collaborate to Produce 2nd Global ICO Report

By | CVA in the News

Zug, Switzerland, June 28, 2018– The Crypto Valley Association has teamed up again with Strategy&, the strategy and consulting division of CVA member PwC, to launch the June 2018 edition of their quarterly reports on the global Initial Coin Offering (ICO) market. The report, the second in its series, provides a comprehensive overview of ICO activity globally, while exploring key changes in the space since 2017. It also presents insight into regulatory developments in key blockchain hubs such as Switzerland, the United States, and Singapore and examines emerging trends in smaller jurisdictions globally. 

According to Daniel Diemers, Fintech Leader Switzerland, Head of Blockchain EMEA at PwC Strategy& the report “…highlights the continued growth and popularity of ICOs globally in 2018, with over 537 ICOs conducted in the first five months of this year, raising a combined total of $13.7 billion USD – more than all ICOs which took place before 2018 combined. Going forward this quarterly report on global ICO activity will continue to track the changes and developments in the industry as it undergoes continuous expansion and substantive change.”

The reports conclusions shed a positive light on the local ecosystem in Switzerland. “This report shows that Switzerland is still a leading hub for ICO and blockchain activity,” said Oliver Bussmann, President of the Crypto Valley Association. “To my mind, Switzerland is the standard bearer in terms of establishing a regulatory environment for the digital economy. The Crypto Valley in Switzerland, offers a unique environment that embraces blockchain technologies and the potential of ICOs while always embodying Swiss values, such as privacy protection and confidentiality. I’m delighted to see that Switzerland continues to be very attractive to visionary entrepreneurs within the crypto space.”

While Switzerland, the United States, and Singapore continue to be leading centres for ICO activity, the United Kingdom and Hong Kong have emerged in 2018 as increasingly significant actors within the nascent global market. Smaller jurisdictions including Liechtenstein, Gibraltar and Malta are also following in the footsteps of Switzerland to position themselves as ICO-friendly hubs. In addition, the report highlights regulatory developments surrounding ICOs globally, noting three distinctive approaches which can be used to characterise the majority of emerging frameworks:  ‘securities-driven’, ‘balanced’, and ‘binary’, most clearly observed in North America, Europe, and Asia, respectively.

“After all the hype of 2017, this year has seen the ICO sector becoming more mature and established, with an improved focus on best business and legal practice, investor relations and fundraising. Hybrid models of combined Venture Capital and ICO financing are increasingly bringing together the best of what both have to offer, so that the soundness of a business is validated while it realises its market potential by receiving crowd support,” concluded Diemers.

The full PwC Strategy& and Crypto Valley Association report can be viewed here.

Crypto Valley Association Announces Strategic Partnership with Lakestar, Unlocking Technology Scaling Expertise For Members

By | CVA in the News, Public Announcements

Lakestar to chair new “Venture Building” Working Group

Zug, Switzerland – 14 May 2018 – The Crypto Valley Association (CVA), a leading global blockchain and cryptographic technology ecosystem, has announced that Lakestar, one of Europe’s foremost venture capital firms, is joining the CVA as a Strategic Partner.

Lakestar will chair the CVA’s new “Venture Building” working group – which shall consist of a team of experts drawn from the blockchain and broader technology sectors – and share its experience in identifying and scaling technology companies led by exceptional entrepreneurs. The Lakestar team has previously invested in category leaders such as Skype, Spotify, Facebook and airbnb. Since raising two funds with an aggregate volume of approx. EUR 500 million in 2013 and 2015, Lakestar has expanded and broadened its portfolio, with more recent investments in Harry’s, Opendoor, GoEuro, FiveAI, Revolut, Blockchain.com and Shapeshift.io.

Through its partnership with Lakestar, the CVA will greatly benefit in its work as an independent, nonprofit association building one of the world’s leading blockchain and cryptographic ecosystems. The CVA will gain valuable insight into how to identify, support, and effectively scale promising and innovative members of its startup community – drawing upon Lakestar’s experience in creating real world traction at scale by numerous companies in Switzerland, Europe, and internationally.

The CVA will provide Lakestar with greater access to its ecosystem and startup community, including a deeper understanding of the problems which innovators within the blockchain sector are attempting to solve.

Oliver Bussmann, President of the CVA, commented: “We are proud to welcome Lakestar as a Strategic Partner to our Association. Their experience of investing in and assisting technology entrepreneurs effectively scale and internationalise will provide unique insight to support the work of the CVA and our members.”

Nicolas Brand, Partner at Lakestar, said: “The world is going through a digital revolution and blockchain technology is at the forefront of this change, challenging the model of the internet itself. We see great synergy between our proven track record of building global, digital leaders and the work of the CVA’s blockchain-focused teams. We look forward to working with the CVA and its members in supporting some of Crypto Valley’s most exciting projects.”

“The CVA has grown significantly in the past year. By expanding our network to include the expertise of companies such as Lakestar, which boasts an exceptional client portfolio, we will further strengthen our foundation and enhance our service offering to our members,” Bussmann concluded.

For more information visit https://cryptovalley.swiss/and http://lakestar.com/

###

About Crypto Valley Association:

Founded in January 2017, Crypto Valley Association is a non-profit association, with over 600 members, established to support the development and dissemination of cryptographic technologies, blockchain, and other distributed ledger technologies by supporting startups and other companies in Zug, Switzerland and internationally. Crypto Valley’s mission is to shape an open, free, and prosperous economy spanning multiple sectors.

Board members of the Crypto Valley Association are:

Oliver Bussmann, Founder & Managing Partner Bussmann Advisory; Vasily Suvorov, Vice President Technology Strategy Luxoft; Professor René Huesler, Director of the Lucerne School of Information Technology, Lucerne University of Applied Sciences and Arts; Sam Chadwick, Director Financial & Risk Innovation Thomson Reuters; Søren Fog, CEO iProtus.

About Lakestar:

Lakestar is one of Europe’s leading venture capital firms investing in technology companies led by exceptional entrepreneurs. Early investments included Skype, Spotify, Facebook and airbnb. Since raising two funds with an aggregate volume of approx. EUR 500m in 2013 and 2015, Lakestar has expanded and broadened its portfolio, with more recent investments in Harry’s, Opendoor, Blockchain.com, GoEuro, FiveAI and Revolut.

Lakestar is on the ground in Berlin, London and Zurich and helps companies to identify new markets and expand into them rapidly, with a focus on the US and Europe. We advise and support portfolio companies in business development, recruitment, technology and marketing. Our investments range from early stage companies to those in their growth stage.

Media Contact:

Liam Murphy

Account Supervisor // Wachsman

Liam@wachsman.com // +353 87 119 2107

Crypto Valley Association Welcomes ConsenSys as Strategic Partner

By | CVA in the News, Public Announcements

ConsenSys to chair new Enterprise Blockchain Working Group, join Regulatory and Policy Working Group

Zug, Switzerland – 25 April, 2018 – The Crypto Valley Association (CVA) is proud to announce that ConsenSys is joining the Association as a Strategic Partner.

Comprised of over 750 blockchain experts, entrepreneurs, computer scientists, designers, engineers, consultants, educators, and business leaders with delivery experience across six continents, ConsenSys is the world’s largest blockchain venture production studio. Its vision is to use blockchain technology to create a world in which distributed applications and the Ethereum world computer support a new class of frictionless, global commerce with inclusion for all.

Oliver Bussmann, President of the Crypto Valley Association, said: “We are delighted to welcome ConsenSys as a Strategic Partner. With its size and scope, ConsenSys occupies a special place in the blockchain community, both in terms of development of public blockchain on Ethereum as well as in the enterprise and government blockchain space. The company has an incredible depth of understanding and expertise not just in the technology, but also in the universe of blockchain use cases as well as the broader implications of decentralization. As a Strategic Partner, we believe ConsenSys will bring great value to our members and to the wider Crypto Valley ecosystem.”

Joseph Lubin, CEO of ConsenSys, said: “We are very excited to become a Strategic Partner of the CVA. ConsenSys has always had a special affinity for the Crypto Valley, which has been the home of the Ethereum Foundation since its founding in 2014. We have watched the Crypto Valley ecosystem grow to become one of the most important and respected pillars of the global blockchain community. The CVA has played a key role supporting this growth through its community building activities as well as thought leadership. We look forward to working closely with the CVA on its mission to promote a successful and sustainable blockchain industry in Switzerland as well as support the broader global crypto community.”

As a Strategic Partner, ConsenSys will chair the CVA’s new Enterprise Blockchain working group, which will serve as a forum for CVA enterprise, corporate and other members to share case studies of enterprise blockchain projects and examine current and future use cases.

Ken Timsit, Managing Director at ConsenSys, said: “Over the last 12 months, ConsenSys has been very active in Europe, where we now have four offices and subsidiaries, and over two dozen ongoing projects in eight countries. We are delighted to be supporting the CVA and look forward to working with peers as we examine the use of blockchain technology to reinvent industry value chains and create new business models.”

ConsenSys, which through The Brooklyn Project and other initiatives has been actively involved in the blockchain policy debate in the US and in Europe, will also be joining the CVA Regulatory and Policy Working Group.

 

Crypto Valley Association President Oliver Bussmann is available for interviews

ConsenSys CEO Joseph Lubin is available for interviews

About Crypto Valley Association:
Founded in January 2017, the Crypto Valley Association is a not-for-profit association established to support the development and dissemination of cryptographic technologies, blockchain, and other distributed ledger technologies by supporting startups and other companies in Zug, Switzerland and internationally. Crypto Valley’s mission is to shape an open, free, and prosperous economy spanning multiple sectors.

Board members of the Crypto Valley Association are:
Oliver Bussmann, Founder & Managing Partner Bussmann Advisory; Vasily Suvorov, Vice President Technology Strategy Luxoft; Professor René Huesler, Director of the Lucerne School of Information Technology, Lucerne University of Applied Sciences and Arts; Sam Chadwick, Director Financial & Risk Innovation Thomson Reuters; Søren Fog, CEO iProtus.

Crypto Valley Conference 20-22 June:
The Crypto Valley Association (CVA), in cooperation with Lucerne School of Applied Sciences, will hold the Crypto Valley Conference in Theatre Casino in Zug, Switzerland, from 20-22 June 2018. The conference brings together leading researchers, developers, lawyers and innovators from across the globe to share and discuss state-of-the-art developments and advances in the blockchain technology ecosystem.

About ConsenSys:
ConsenSys is a venture production studio building decentralized products, platforms and infrastructure for blockchain ecosystems, focusing primarily on Ethereum. ConsenSys is interested in the identification, acquisition, and development of talent and projects on an ongoing basis, in addition to the development of internal projects and consulting work. ConsenSys is based in NYC, with offices in Paris, Dubai, London, Dublin, San Francisco, Toronto, Sydney, Manila, and other major cities around the globe.

Follow ConsenSys: GitHub, Facebook, LinkedIn, Twitter, https://consensys.net/


Media Contact:

Liam Murphy
Account Supervisor // Wachsman
liam@wachsman.com
+353 87 119 2107

 

CVA Q1 2018 Newsletter – Playing by the rules

By | CVA in the News, Public Announcements

Better late than never, as the saying goes: on the evening of 23 April we released our Q1 2018 newsletter with a wrap up of our major activities during the first three months of the year. As CVA Board member René Hüsler wrote in the editorial, this quarter it was all about regulation:

“If there was one theme that dominated the crypto world in Q1 it was ICO regulation.

This was certainly the case in Switzerland, where in February FINMA released its ICO guidelines, garnering a great deal of interest both domestically and in the global blockchain community.

At the CVA, one of our main responsibilities is to represent our members and the nascent blockchain industry in Switzerland in the regulatory and policy debate, and so it’s no wonder that we have been very active in the ICO area too.

As you can read below, in January, we released our ICO Code of Conduct. We also partnered with FINMA to organize and carry out a series of roundtables in Zug, Geneva and Lugano to explain the guidelines to the public, and collect feedback.

We are involved in the policy discussion in other ways too. We take part in the Swiss government‘s Fintech Roundtables. We are also a member of the Swiss Finance Ministry’s Blockchain Task Force. Participation in these and other forums allows us to add our perspectives and insights as we work to educate policy makers and support regulation that both protects consumers and fosters innovation.

Both of these goals are extremely important to our community.

We believe for example that the ICO will over time go mainstream to become an innovative and important way for companies to raise capital. Regulation will of course play a central role in this development.

Nor is it just ICOs. Our long-term goal at the CVA is to support a sustainable and successful blockchain industry in Switzerland, one that creates jobs and contributes to economic growth. Clearly legal and regulatory issues will play an important role in the broader industry too. (To get a flavor of what that means, just consider the thorny issues around how blockchain technology can be reconciled with GDPR in Europe.)

We will therefore continue to take part in the regulatory and policy discussion on all levels, and do our best shape the debate to the benefit of our members, our growing industry but also the users and consumers of this new technology we are building.

We encourage all members to stay on top of the issues, and where possible, join the debate too.

You can read the full newsletter here.

Extra seats added for FINMA ICO roundtable in Zug! Last chance to apply

By | CVA in the News

FINMA will hold a series of general roundtable discussions (in English) to present its recently published ICO Guidelines in Zug, Geneva and Lugano. Amongst others FINMA will present its assessment of ICOs under its guidelines, the categorisation of tokens and how ICOs are potentially impacted by financial market regulation.

Due to high demand from members the Zug, Burgbachsaal event capacity has been increased by 50 seats. To accomodate this the new closing date for the Zug, Burgbachsaal event registration is now Monday 12th March 2018 at 11.00. 

Also a limited number of seats are still available for the Lugano, USI University event taking place on 10th April. Registration for the Lugano, USI University event will remain open until Friday 30th March at 11.00.

Registrations will be handled on a first-come, first-served basis. Participation is free of charge. Question Submission has already closed. Thank you to those who submitted questions.

***** NEW EXTENDED CAPACITY *****

Zug: 14th March 2018, 09.00-11.00, Burgbachsaal (Dorfstrasse 12, 6300 Zug), link to registration

***** LIMITED SEATS REMAINING *****

Lugano: 10th April 2018, 14.00-16.00, USI University (Via Buffi 13, 6900 Lugano), 13.00-15.00, link to registration.

***** SOLD OUT *****

Geneva: 21st March 2018, 10.00-12.00, Impact Hub Geneva (Rue Fendt 1, 1201 Geneva).

FINMA roundtable: presentation of the ICO guidelines

By | CVA in the News

FINMA will hold a series of general roundtable discussions (in English) to present its recently published ICO Guidelines in Zug, Geneva and Lugano.

Amongst others FINMA will present its assessment of ICOs under its guidelines, the categorisation of tokens and how ICOs are potentially impacted by financial market regulation.

The attendees who have questions to Finma about the ICO Guidelines, if any, are kindly requested to send such questions ultimately by 6th March via the Question Submission Form link.

The closing date for registration is 6th March 2018. Please note that the number of places is limited. Registrations will be handled on a first-come, first-served basis. Participation is free of charge.

Zug: 14th March 2018, 09.00-11.00, Burgbachsaal (Dorfstrasse 12, 6300 Zug), link to registration

Lugano: 10th April 2018, 14.00-16.00, USI University (Via Buffi 13, 6900 Lugano), link to registration.

Geneva: 21st March 2018, 10.00-12.00, Impact Hub Geneva (Rue Fendt 1, 1201 Geneva), link to registration.