From SwissInfo:
Around a quarter of the $1.5 billion (CHF1.45
billion) raised by cryptocurrency crowdfunding ventures this year has
found its way to Swiss foundations. Many people on social media channels
are crying foul, but is there anything sinister behind half a billion
dollars finding its way into such structures in the last few years?
What’s been happening?
This
year, new cryptocurrency projects have stumbled on a rich source of
seed capital – crowdfunding. This helps emerging ideas to get off the
ground by bypassing cautious venture capitalists and tapping into a
growing grassroots enthusiasm for cryptocurrencies.
The idea is
not exactly new, but the so-called ‘initial coin offering’ (ICO) model
has exploded this year. In the whole of 2016, some $222 million was
raised in this fashion. In the first half of 2017, the volume of funds
raised has already exceeded $1.5 billion.
For example, Tezos raised $232 million in a few days, beating the $150 million accumulated by the Bancor ICO some weeks before.
What’s this got to do with Switzerland?
These
start-ups obviously need a place to house their newly acquired funds
while they actually produce the innovations they have promised. Why not a
bank account? Because they say they are non-profit, open source
ventures working for the public good. Some even issue tokens to people
who contributed to the crowdfund raise.
Switzerland, and
especially canton Zug, has forged a growing reputation as a global
cryptocurrency centre. The Zug-based cryptocurrency advisory service
Bitcoin Suisse has been involved in several ICOs and estimates a quarter
of the global capital raised now sits in Swiss foundations – that’s
more than half a billion dollars over the last couple of years.
Switzerland
has an established foundation model that support NGOs, charities and
other entities. Foundations separate the funds from the people running
the organisations, a way of making sure donations are not syphoned off
into the wrong pockets. Independent officers manage the funds according
to the organisation’s charter and not at the whim of individuals.
Law
firm MME Legal says it has helped 13 crypto foundations to set up in
Switzerland so far, and is advising around 10 more such entities.
So what’s the problem?
Even from the beginning, when the
Ethereum Foundation set up in Zug in 2014, social media posts challenged
the motivation of setting up foundations as piggy banks for
cryptocurrency ventures....
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