Switzerland's «crypto valley» says initial coin offerings, which raised more than $1.6 billion so far this year, need regulating. The move follows criticism that the alpine nation is letting token providers play fast and loose with investor cash.

Switzerland has been home to a glut of initial coin offerings, the digital currency version of initial public listings. The country's standards for such ICOs are laxer than in other hubs like the U.S., Singapore, South Korea, Russia move to regulate cryptocurrency offerings or even, as China did recently, ban them.

The alpine nation is at the epicenter: four of the five largest token sales to date have been by Swiss firms, raising more than $600 million. As finews.com pointed out recently, this gold rush is largely unregulated.

Niklas Nikolajsen 500

The Swiss government has embraced cryptocurrencies whole-heartedly: members of the country's governing council regularly visit «crypto valley» in Zug, where many providers have set up shop (pictured above, Swiss economy minister Johann Schneider-Ammann, at right, visits Bitcoin Suisse head Niklas Nikolajsen, left).

«We believe Switzerland should support this trend [token sales to raise capital] by developing clear, comprehensible, yet flexible regulation that clarifies the legal status of ICOs and the tokens generated,» said Oliver Bussmann, who runs the Crypto Valley Association.

Self-Regulatory Stance

The trade group for digital currencies said it would draft a code of conduct for token firms with legal, moral and security requirements. It will also give ICO investors a clear idea of the risks involved. The move is meant to boost confidence in the new but rapidly-growing crypto sector.

In doing so, crypto backers are advocating a self-regulatory stance which is widespread in traditional Swiss finance, and not been entirely successful. The draft is to be drawn up by specialists including lawyers, accountants and cybersecurity and communications experts.

«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,» said Bussmann, who is a long-time advocate of blockchain technology and Swiss bank UBS' former head of information technology.