The Growing Crypto Ecosystem in Switzerland and Liechtenstein
The diverse ecosystem surrounding investments in crypto assets has grown significantly in Switzerland and Liechtenstein over the past year. According to the latest Crypto Assets Study by the Lucerne University of Applied Sciences, the region has seen a steady increase in the number of companies offering products and services related to crypto assets.
The growing crypto assets ecosystem in Switzerland and Liechtenstein
Between July 2023 and June 2024, the prices and market capitalization of Bitcoin and other crypto assets have increased significantly. This growth has also been reflected in the Swiss and Liechtenstein ecosystem, with the number of companies offering products and services related to crypto assets increasing to 359 by the end of June. The Crypto Valley, which is concentrated in Zug and Zurich, has seen significant growth, with notable branches in Liechtenstein, Geneva, Ticino, and Vaud.
A Diverse Range of Crypto Assets
The crypto assets ecosystem in Switzerland and Liechtenstein is characterized by a diverse range of products and services. Many companies focus on enterprise and institutional clients, with B2B business models being particularly significant. The offerings are varied, with a focus on centralized investment services for direct and indirect investments. Companies that offer services for blockchain-based, decentralized solutions primarily focus on self-custody solutions (so-called “crypto wallets”). Almost 90% of the companies surveyed are not limited to national markets but are also active internationally.
The diverse range of crypto assets in Switzerland and Liechtenstein
Growing Trading Volumes
In the first half of 2024, the trading volumes for indirect crypto products on traditional Swiss exchanges showed an upward trend again, after stagnating at a relatively low level in 2022 and 2023. A total of around CHF 2 billion was traded during this period. At the same time, trading volumes from Switzerland for direct investments in crypto assets via crypto exchanges also increased.
Opportunities and Risks of Crypto Assets
The market risks of crypto assets are reflected in their highly volatile prices. In addition, there are operational risks, as well as liquidity and credit risks along the entire value chain. These vary depending on the type of investment. In other words, whether investing directly or indirectly in crypto assets, and whether this is done decentrally via the blockchain (“Decentralized Finance”, or “DeFi”) or via a centralized provider. A newly developed classification method categorizes crypto assets into three main categories: first, the design of the token, which determines how a crypto asset is technically constructed. Second, the properties of the underlying blockchain system on which the asset is based. And third, the dynamic aspects of how the crypto asset is used in the market. Market participants can use this method to evaluate the properties of crypto assets in a structured way and act accordingly.
The opportunities and risks of crypto assets
Conclusion
The crypto assets ecosystem in Switzerland and Liechtenstein is growing and becoming increasingly diverse. While there are opportunities for investors, there are also risks that need to be carefully evaluated. As the market continues to evolve, it is essential for market participants to stay informed and adapt to the changing landscape.
