Xapo, the U.S.-based bitcoin company, received the go-ahead from the Swiss regulator and can now start doing business in Switzerland. The decision by Finma may yet turn the country into a hub for crypto currencies.
Xapo had announced more than one-and-a-half years ago that it was planning to move its headquarters to Zug from Palo Alto in California.
The company, which specializes in the storage of bitcoins, finally received a license to operate in Switzerland. The process of awarding the license had dragged out as it long remained unclear whether Xapo needed a banking license or not.
No Banking License Needed
Finma, the Swiss financial market regulator, has now come to the conclusion that Xapo doesn't need a full banking license because the safe-guarding of private keys wasn't to be compared with conventional banking operations such as account keeping, Olga Feldmeier, the former head of Xapo Switzerland, told finews.ch.
The bitcoin owner is the only one to know the private key. You need one if you plan to make transactions.
Breakthrough for Crypto Currencies
The decision by Finma is a breakthrough for Xapo, Feldmeier said, who still works as a consultant for the firm. «Companies active in the crypto currency business can now use Switzerland as a hub,» Feldmeier said, adding that «Switzerland may develop into the crypto currency center of the world.»
With the decision, Switzerland moved ahead of other financial service markets such as London, according to Feldmeier.
Several crypto currency companies have established themselves in the region of Zug. Prominent among those are bitcoin broker Bitcoin Suisse and blockchain company Ethereum, which developed the digital currency Ether.
Technological Development
It is far from clear whether consumers will accept bitcoin or other crypto currencies. They have after all already been used for criminal activities, earning them a bad reputation.
Experts say that the technology used for bitcoin, Blockchain, is more promising than the crypto currencies themselves. Banks, such as UBS and Credit Suisse, are working on further uses of the technology. They want to use Blockchain to make securities trading cheaper, more secure, and cheaper.
