Bitcoin companies proffering virtual currency wallets often don't fuse well with legal matters, as such, they often face a difficult legal quandary: do they have to operate as a financial institution, likened to a bank, with all its regulations intact, or can these companies operate under a different type of outfit?
In Switzerland, that question has been answered.
Switzerland Issues Conditional Approval To Xapo
Xapo, a bitcoin wallet provider said it has received conditional approval from Switzerland's financial market watchdog for its operations in the country, Reuters reported. The move is being seen as a regulatory breakthrough for virtual currency safekeeping companies.
It took almost two years of effort and investment, according to Wences Casares, Xapo's CEO, to obtain conditional approval from the Swiss Financial Market Supervisory Authority (FINMA) to operate in the country.
The approval hinged on several key factors, which included a requirement for Xapo to enter a self-regulatory organization membership, among others. Casares, however, said that Xapo was optimistic of the conditions and successfully serving non-U.S. customers from Switzerland.
Casares was quick to note that developing the product exhausted the application process, instead of entanglements with bureaucracy.
"It was this product development, not bureaucratic indifference, that added weeks and months to the application process," he said. "[M]oreover, the tools that Xapo was required to develop will ultimately benefit our users by ensuring effective oversight of our company."
Xapo
Xapo was founded in Silicon Valley, and like many virtual wallet companies, it stores private keys allowing clients to have access to their virtual currency funds. At present, other crypto-currency companies are already operating in Switzerland, but Xapo's operation as a bitcoin wallet provider had raised questions whether it should obtain a banking license to operate, as previously stated.
The Bitcoin Currency
By extension, bitcoin is an internet-based currency sans a central authority — for now, at least. It instead depends on a global computer network to facilitate and validate transactions, a process which has become quite a hot topic in regulatory and legal discussions.
As of this time, Xapo is categorized as a financial go-between, and it doesn't need to secure a banking license in order to operate. Perhaps the company's insistence that it doesn't take deposits helped it brave through the ordeal. Xapo says that it won't serve U.S. customers, potentially because of the shaky ground beneath the whole bitcoin topic.
The approval doesn't come as a total shock, however. Switzerland plays a key role in the financial community, and it has been pursuing courtship of bitcoin operations in a preemptive and proactive attempt to secure its future. The legalities involved with the grant, however, are of key importance. The move might echo across other virtual wallet providers, who in turn could see Switzerland as an attractive entry point for being approved.
How the bitcoin conversation is sculpted is left to the lawmakers, companies, and regulators, vying, presumably, for common ground. If not for FINMA, Xapo's new inroad could have never existed.
"Many regulatory bodies in similar situations would have rejected Xapo (and Bitcoin) entirely," Casares said. But Xapo is confident that "FINMA has positioned Switzerland as a hub for fintech innovation and ensured Switzerland's primacy in global financial services for decades to come."
