Estonia is Planning to Launch Estcoin  – and that’s only the Start

The startup world is being rapidly transformed by Initial Coin Offerings (ICOs).
Instead of giving up shares, many startups are now raising finance by issuing their own blockchain-based crypto coins to investors around the world.
The US, Singapore, and Switzerland are currently the leading jurisdictions for entrepreneurs considering where to launch their ICOs, although all governments are still figuring out how to regulate ICOs.
Unfortunately for both entrepreneurs and investors, that means ICOs continue to operate in what could be described as legal grey areas at best, while the lack of clarity and trust is holding back the benefits of this innovation in finance.
Despite this, the amount of money being raised globally by startups through ICOs is now far in excess of the amount being raised through venture capital. Raising finance is only half the story of ICOs though.
People who invest in crypto tokens issued by a startup are then strongly incentivized to support the development of that startup in other ways too and they tend to form an online community.
Estonia’s e-Residency programme is also a fast-growing startup — albeit a government startup — because we are constantly improving it based on the feedback of real e-residents, often with best practices that we’ve taken straight from the private sector. We also have our own fast growing community, which is increasingly looking for ways to connect and gain more value from the programme.
So in August we published an article on our e-Residency blog asking what would happen if a country, such as Estonia, decided to launch its own crypto tokens with an Initial Coin Offering (ICO). We nicknamed these proposed tokens ‘estcoins’ and explained how e-Residency would provide the platform for distributing and trading them globally because it’s a secure digital identity that anyone in the world can apply for.
The article went viral almost instantly, generating a large amount of media coverage globally, including in most major publications. Our best estimate is that around 200 million people around the world read about the idea.
Many people were enthusiastic and wrote about various options for how estcoins could be structured. Many people were also critical, including some who wondered if the whole thing was nothing more than a marketing stunt for the e-Residency programme.
We could have developed the idea behind closed doors first, but openness has always been the best policy for developing the e-Residency programme. Starting an open discussion at the earliest possible stage has been useful to gather both the feedback needed to refine the idea and the support needed to proceed with it. Both the supporters and the critics have been invaluable.
My initial assumption was that the crypto community would be the most critical of any government involvement in their sector, but the opposite was true. Entrepreneurs and investors within the crypto world expressed enormous interest and largely seemed to welcome the idea, while traditional institutions were the most critical. Even European Central Bank President Mario Draghi voiced his concern.
Much of the criticism of estcoin was based on the fact that Estonia simply can’t start its own cryptocurrency even if it wanted to. Estonia’s only currency is the euro and this is an essential feature of our EU membership, which we are proud to have. No one here is interested in changing that.
That’s why we have always referred to estcoin as a proposed ‘crypto token’.
Governments do need to consider the disruptive impact of how crypto tokens can be used as currency because they provide a more efficient means for exchanging value globally. However, crypto tokens have far more significance than their use as a currency and don’t necessarily fall into that category.
From Estonia’s perspective, estcoins were proposed as a way to raise money and support for the development of our digital nation from more people around the world. We would also want to structure the tokens so that they help build our e-resident community and incentivize our own key objective, which is to increase the number of companies started in Estonia through e-Residency.
This activity already has a major positive impact on Estonia as e-residents bring a significant amount of business to the Estonian economy. An independent report released this month by Deloitte revealed that e-residents have already brought €14.4 million back to Estonia in the first three years and this is predicted to rise to €1.8 billion by 2025, which is a return of €100 for every €1 invested in the programme. We will only achieve this though if we continue to provide real value to our e-residents around the world.
The purpose of estcoin is to accelerate this, while also providing additional funds and interest for the development of our digital nation.
The question remains though — What problem does estcoin solve for people who hold estcoins? This is another key and commonly repeated criticism of the proposal that estcoin is ‘a solution looking for a problem’. Since the proposal was published, I’ve been repeatedly asking audiences if they would be interested in purchasing estcoins and the response is a resounding yes, even if they are not always sure why yet.
Image via Twitter
You might be surprised to hear this, but we completely agree with the criticism that estcoin is a solution looking for a problem. However, that is not necessarily a bad thing.
E-Residency was also a solution looking for a problem when the programme was launched. The solution was to enable anyone in the world to apply for an Estonian ID digital ID card and then gain access to our e-services, but even many of the first e-residents were not sure what problems this would solve for them.
Three years (and almost 30,000 applications) later, we now have a very good understanding of the problems that e-Residency solves by helping democratise access to entrepreneurship globally and enabling the rise of location-independence. You can read more about who are Estonia’s e-residents here or learn about some of their problems solved by the programme in this advert we made:

Since the estcoin proposal was made, we’ve been carefully reading and listening to feedback from around the world. As a result, we do now have a better understanding of not just how estcoin could be structured, but also why people would want to hold them.
Before I outline that though, I want to explain the one thing that we need to do first (and why) for our vision of estcoin to become reality: we must make e-Residency the best option globally for launching a trusted ICO.

Trusted e-Residency ICOs
Blockchain technology has opened up a divide in the way we structure our world. On one side there are governments and traditional institutions, while on the other side is the crypto community. Both of these sides often behave as if the other has no future.
Like most things, the truth is somewhere in the middle and this division is holding everyone back. By not embracing crypto, governments are failing to unlock a powerful driver of economic growth and risk losing relevance entirely. By not embracing public oversight, legitimate crypto investors are tarnished by fraudulent ones, and crypto investors are far less certain about the value and legitimacy of their tokens.
For an overview of the risks and complexities involved, the U.S. Securities and Exchange Commission has just published a comprehensive statement on cryptocurrencies and Initial Coin Offerings that is worth reading.
We all need to acknowledge that blockchain is developing powerful new solutions that are going to disrupt the world, but public authorities can play a key role in supporting this for the benefit of everyone. In effect, we need a peace agreement between these two sides.
That’s now happening in Estonia. After the estcoin proposal was published, I organized a kickoff meeting inside the Estonian Parliament involving representatives from across Estonia’s public and private sector, as well as key crypto entrepreneurs and ‘hackers’ from around the world. It was attended by members of the e-Residency programme team, our advisory committee, Estonia’s Ministry of Finance, Estonia’s Parliamentarians from both the national and EU Parliament, the Bank of Estonia, companies conducting ICOs, and law firms advising them.
I particularly want to thank Trent McConaghy, Anish Mohammed and Bruce Pon for going the extra mile (well, thousands) by flying to Estonia for this.
Together, we began the enormous task of understanding how Estonia could better embrace blockchain and the use of crypto tokens in a way that supports legitimate entrepreneurs and helps grow our digital nation while protecting our public interest and minimising risks to our state and business environment.
We sought to learn from the best practices developed in other countries, but also explore how Estonia’s unique advantages can take us further. Since then, we have continued to work closely together and are constantly exploring solutions and exchanging ideas.
For understandably cautious reasons, Estonia has not so far been a particularly friendly jurisdiction towards crypto. To our surprise then, the first thing that we discovered is that there are many aspects of Estonia’s business environment that crypto entrepreneurs already hugely favor — from 100% online cross-border management to a 0% corporation tax on undistributed profits.
In addition, our secure digital identities can be used as part of the KYC (Know Your Customer) procedures that would otherwise cost companies both more time and more money when they need to verify identities of investors and customers. Everyone’s heard stories about investors losing access to their crypto tokens — perhaps because they forgot their private key for example — but this doesn’t happen to e-residents if their wallets are linked to their government-backed digital identity.
In fact, a number of companies are in the process of launching ICOs in Estonia through e-Residency, while various others are planning theirs and are already exploring how to integrate the e-Residency card into their KYC procedure.
As the ICO phenomenon continues to grow, there will be particular nations that become “havens” for companies launching them. However, we do have concerns about the current state of the ICO market and do not want to attract just any ICOs. Too many ICO investors have already been left disappointed by poor behavior and lack of transparency from those that they have given their money to.
Many ICOs also try to use the reputations of organisations and people who may have no real involvement in the project. With that in mind, please note that any announcements from e-Residency (or other parts of the Estonian state) related to our proposed crypto token or how Estonia is supporting ICOs would always be shared in detail on this blog.
The reality is that a large proportion of ICOs simply won’t have the standards that we desire.
In addition, the value of crypto tokens in general are extremely volatile right now so the rapid gains we are currently witnessing by Bitcoin and others could easily be followed by rapid devaluations in the near future. Many analysts have pointed out similarities between the booming crypto market today and the booming dotcom market of the 90s, which eventually did burst. However, the fundamental technology behind it — the internet in that case — did go on to change the world and open up vast new possibilities so the same thing could happen to crypto, even if it’s also a bubble about to burst.
What people are looking for, in any eventuality, is real value through greater trust. Trust is also the most important value behind e-Residency though because we are offering a secure government-backed digital identity that provides access to our open and transparent business environment. That’s why we will focus on attracting trusted ICOs.
So how can we better support trusted ICOs through e-Residency?
The most obvious solution at first is to change laws. Estonia has certainly shown a willingness to both amend legislation to support e-resident entrepreneurs when appropriate and to amend legislation to support emerging industries. Estonia is, for example, the first country in Europe to legalize delivery robots and ride-sharing apps. There’s even a discussion underway about how Estonia can legalize Artificial Intelligence.
But it’s not always necessary to legislate in order to find solutions. In addition, there are enormous complexities that must be addressed first and some of this is at the EU level.
Those discussions are ongoing, but the first thing we can do is relatively straightforward: We can provide clearer guidance on how to legally and responsibly launch an ICO within our regulatory environment.
The e-Residency programme is keen to support responsible ICOs. Although we would obviously never ‘back’ an organization’s ICO, we can encourage ICOs launching through e-Residency to follow a strict set of best practices outlined in our guidelines in order to provide a higher level of trust and transparency to investors.
We are still working on the details and we would love to read your comments below about what should be added to the guidelines, but it would include, for example, an overview of how to classify crypto tokens, what rules need to be followed to comply with laws and which best practices should always be followed too, such as ensuring that investors can easily monitor how the money raised is spent.
One particularly tricky issue for ICOs at the moment is whether tokens should be classified as security or utility tokens. We need to ensure that our guidance embraces both and encourages entrepreneurs to accept the right classification for their needs, instead of attempting to structure their ICOs in a way that avoids certain responsibilities. We understand that entrepreneurs are wary of having their crypto tokens labeled as securities, but this provides greater trust to investors so we should instead be bold enough to consider how our business environment can be more supportive to entrepreneurs who do this.
Since the estcoin proposal was published, there was a significant spike in applications for e-Residency and we know many of them signed up because they are interested in investing in ICOs. This means that companies that launch their ICOs through e-Residency and integrate our digital IDs have access to a growing community of investors who can be onboarded at lower cost, time and hassle.
Many e-residents already use the programme for investment purposes, but our longer term objective is to create an economy of scale for both investors and entrepreneurs to use our platform together.
The private sector will also need to perform an important role supporting this by providing even more of the services required to support both groups, such as financial and legal services. If you are reading this and think your company can help support this growth then please do get in touch with our team on
Our aim is for Estonia to become the best option globally for trusted ICOs as a result of our public and private sectors working together to make the most of our advantages, including our transparent business environment and our e-Residency programme. Estonia has been at the forefront of technological innovation in business ever since engineers in Estonia discovered how to cut out the middlemen of the telecommunications industry by building Skype. We now have the opportunity to cut out the middlemen of central stock registries with a combination of blockchain, crypto tokens and secure digital identities. This would provide truly decentralised and trusted peer-to-peer securities trading globally through e-Residency.

How will estcoin work?
As part of these discussions across the public and private sector, we have also examined how Estonia’s own crypto token could function, taking into account the feedback that we have received globally.
This project was initially nicknamed ‘estcoin’, which we have always explained is a working title, but it has rapidly become a global brand so we will continue using it at present.
We have identified not one, but three variants of estcoin that would benefit both our digital nation and those who use them. All three of these models of estcoin are viable and can be introduced (even without alarming the European Central Bank).
We are proceeding with estcoin not despite the criticism aimed at the proposal, but thanks to the criticism because it has enabled us to better understand how to proceed.
It is possible that one of these variants will become a reality or that more than one model would be chosen to operate simultaneously as estcoin in order to meet multiple purposes.
Here’s an overview of the three estcoin variants and the thinking behind them:

1.The community estcoin
I mentioned that one of the advantages of crypto tokens is to incentivise behaviour by ensuring that token holders benefit from the growth of their community.
It’s an important point emphasised to us by Ethereum founder Vitalik Buterin when we outlined our idea and showed him the first article in advance of publishing it. As we quoted him at the time:
“An ICO within the e-Residency ecosystem would create a strong incentive alignment between e-residents and this fund, and beyond the economic aspect makes the e-residents feel like more of a community since there are more things they can do together.”
The community estcoin would be structured to support the objective of growing our new digital nation by incentivising more people around the world to apply for and make greater use of e-Residency. This includes encouraging investors and entrepreneurs to use e-Residency as their platform for trusted ICO activity.
There are currently an enormous number of e-residents who already volunteer their help to grow our digital nation in different ways, such as by producing content about their experiences or encouraging others to sign up, but it’s been a challenge to understand how we can reward them as well as provide support.
In addition, one of the most valuable activities that e-residents do to grow the value of the programme is to conduct business with each other, as well as Estonians. This means that e-Residency is not just access to valuable services, but also access to an increasingly valuable community of like-minded people who can help you grow your company too.
Fortunately, we are already developing a community platform so we want to ensure then that estcoins could have a real utility value within that platform and that they could be automatically issued in exchange for activities that support the community.
For example, e-residents should be able to earn estcoins if they drive web traffic to e-Residency, successfully sign up a new e-resident, post a tender within our community that provides work to another e-resident or Estonian company, or spend time providing useful advice to other e-residents.
Estcoins will enable that platform to grow faster through a network effect, but it’s possible that any funds raised could also be allocated to further develop this platform, as well as provide investment into companies that operate within Estonia’s business environment.
We would also like to involve private sector service providers in this too because they are a crucial part of the e-Residency ecosystem and they provide some of the ‘scarce resources’ that people would want to use their estcoins to acquire, such as accountancy, banking or virtual offices. There are a growing range of companies offering a growing range of services to e-residents so we could start encouraging them to integrate the exchange of estcoins too.
In fact, a national ICO to launch community estcoins would likely require the creation of a Public-Private Partnership as no single organisation should have control of both the tokens and the allocation of any funds raised.
Although our primary focus for developing estcoin at this stage is their utility, it is also important that those who hold these estcoins are able to benefit in future in return for helping grow our digital nation by developing e-Residency. This will eventually mean that community estcoins should be openly tradable on both traditional and crypto exchanges, but is likely that there will be a lock-up period to discourage speculators during the launch and ensure that estcoin holders gain from the long-term growth of our digital nation.
Transparency is important and not just for e-residents and their companies, but also for the programme. That means we need to be clear about the total supply of estcoins, what they can be used for and their classification in law. A federated blockchain would likely be required to provide leadership of the network to the Estonian government and independent organisations.
Crypto tokens used in this way enable vast numbers of people operate independently to work together for the benefit of everyone. We already know that e-residents want to connect and conduct more business with each other and we already know from the past few months that there are more numbers of people who want to acquire estcoins.
As a digital startup, the e-Residency programme is doing what’s never been done before by scaling up an entire country online. This is currently happening at an ever increasing rate as the benefits of being an e-resident increase. Community estcoins would be the mechanism to accelerate this and radically improve our entire service by increasing the value of joining our community and rewarding those who help us build it.

2.The identity estcoin
At the heart of Estonia’s digital nation — and our e-Residency programme — is a secure, government-issued digital identity.
It’s a world leading initiative in digital identity, but the technology that underpins it requires continuous development in order to remain cutting edge. Estonia is already a blockchain nation in many ways so what would happen if we also starting using blockchain technology to tokenise identities?
In this model, estcoins would be the blockchain-based tokens used for activities within our digital society, such as digitally signing documents, logging into services or enforcing smart contracts.
Estonians and e-residents would receive a certain amount of tokens that are personal and attached to their digital identity and can then acquire more when required. Even if these identity estcoins would need to be purchased, this would not raise any additional revenue for Estonia, but merely contribute to the maintenance of the network. In fact, everyone would save money as a result of this proposal.
Here’s where these estcoins differ sharply from the previous model. Identity estcoins can not be exchanged or sold because they are part of your identity. In fact, the value of them would decrease as the e-Residency programme grows and more people join the network. This would create an economy of scale, which constantly lowers the cost of transactions over time.
This system would enable even greater transparency within our business environment, which not everyone in the world might appreciate, but it is the key reason why people become e-residents. Transparency provides them with the trust needed to more easily conduct business globally. In fact, this estcoin model could even provide our partners at the Estonian Police and Border Guard Board with the ability to revoke tokens in certain circumstances where laws have been broken by an e-resident.
Why would Estonians and e-residents want this model to proceed?
Identity estcoins would eliminate some of the technology that is currently required to operate our digital nation and that would also eliminate much of the costs and hassle that this technology brings.
Estonians and e-residents would benefit from these lower costs and be able to do almost anything online using their digital IDs with greater ease.
For example, we recently faced challenges with the certificates used on digital ID cards so they had to be suspended. No one’s digital identities were compromised and new certificates were provided for download as fast as possible, but it wasn’t a smooth process. In addition, this issue highlighted how our digital nation depends on coordinating an enormous range of private sector providers to integrate our digital identities and ensure they function smoothly.
In contrast, identity estcoins would work with any device and never require updates.
For Estonia, this would not just radically improve the reliability, security and transparency of our digital infrastructure, but also enable our country to scale up more effectively. Various parts of the Estonian government work incredibly hard together to ensure our country benefits from e-Residency, from the Police and Border Guard who issue the cards to our embassies around the world who receive them in the diplomatic post then conduct the face-to-face meetings to hand them out.
However, if we can improve and legalise remote verification for acquiring a digital identity then e-residents could join our digital nation almost instantly online instead of having to wait for their card to be administered and then travel to collect it in person.
The introduction of identity estcoins would also help future-proof our digital nation and ensure we are prepared to take advantage of even more possibilities in future as technology and legislation evolves.

3.The euro estcoin
We’ve discussed models for estcoin that either increase or decrease in value, but what if we introduced estcoins and simply pegged their value to the euro? That’s how euro estcoins would work.
We would never provide an alternative currency to the euro, but it’s possible that we could combine some of the decentralized advantages of crypto with the stability and trust of fiat currency and then limit its use within the e-resident community.
Banks would be required to move money in and out of euro estcoins, but transactions could then take place independently of them through the blockchain. This means that community-based value exchanges could take place globally for free. All that is required is a digital wallet and the commitment of government to buy back every euro estcoin for one euro.
If I think about our e-Residency programme team as a very small community of 15 people then look at how that would work with something as simple as birthdays. There’s now 15 people on the team so each time there’s a birthday we tend to spend about ten euros each. That’s 13 payments each time, which cost the banks about 40 cents each so that adds up to a hidden payment of over €5, as well as delays in processing it. However, this value is being constantly circulated between us so why should the banks be involved just because we want this exchange to take place digitally? Daily life would be faster and more efficient if we could exchange value independent of the banking network.
Now look at the complexities of our e-resident community who are engaging in cross-border exchanges every day. Our e-residents are world citizens and the ability to conduct business globally with greater ease is one of the main drivers behind the growth of the programme. Euro estcoins within the e-resident community could facilitate this exchange of value globally, while encouraging more business among e-residents and Estonians.
The way euro estcoins operate within the e-Residency community would be similar to how other types of tokens operate within video games or simulated online worlds. E-residents could purchase euro estcoins within their new platform then trade them with other e-residents and cash out when required, while ensuring that all necessary banking and taxations rules are followed. The main difference of course is that e-residents are not playing with these tokens within the platform for fun. Instead, what they can win from the introduction of this variant of estcoin is frictionless global trade with other e-residents.

Join the new digital nation
We know that tokenisation through blockchain technology will be an important part of our planet’s future and that ICOs are rapidly transforming the way startups grow, but that issues of trust and legality need to be addressed. We also know that there is demand for our proposed estcoins and that these could help our e-resident community grow more exponentially.
We will continue to develop these proposals with the public and private sector in Estonia, as well as with crypto entrepreneurs, investors and potential private sector partners around the world.
As I’ve previously written in my vision for e-Residency, we are living in a very brief period in human history in which the world’s population is confined in its opportunities by the geopolitical boundaries. For now, a nation is assigned to us at birth then usually stays with us for life. This random allocation of the world’s population determines our life opportunities more than almost any other single factor.
However, change is coming. Crypto tokenisation will alter the nature of our world whether we act or not, so we must ensure we are taking a lead and that is already happening in Estonia. Our focus will remain on our overall objective to grow our new digital nation and democratise access to entrepreneurship globally.
You can read more about my vision for e-Residency here.
Thank you to everyone around the world who has provided their thoughts, encouragement and criticism of the estcoin proposal. You have all contributed to improving it and enabling us to go forward. I look forward to giving you more updates in the new year.
You can join our new digital nation by applying for e-Residency at If you want to know how to use the programme to create an EU company with EU business banking anywhere on Earth then there’s a detailed guide here.

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Deloitte & Finform Automate the Process of Opening Customer Bank Accounts

The Swiss fintech pioneer and automation specialist Finform and the compliance experts from professional services firm Deloitte Switzerland are joining forces to simplify financial service providers’ compliance processes. The integration of the range of regtech services offered by Deloitte Managed Services and Finform makes it possible to almost completely automate the process of opening customer bank accounts (KYC).
Compliance is a bigger challenge than ever for Swiss financial service providers. The high costs and increasing complexity of the market-specific regulatory processes represent a major challenge for banks. This in addition to the cost and innovation pressure which they are already subjected to.
Regulatory compliance is mandatory, but it is also non-differentiating and is very costly. This is the reason why financial service providers are increasingly investing in smart solutions that draw on today’s technology and that spread the costs of regulatory compliance across industry players – regtech.

Automating the process of opening customer bank accounts
Fintech companies such as pioneer Finform have begun to successfully offer automated solutions for the process of opening customer bank accounts (“know your client”, KYC). Previously, the potential applications of such digitalised solutions have been focussed on certain customer groups – in particular standard customers without complex structures.
Although it is possible to handle a relatively high proportion of customers and transactions with these solutions (about 80%), there is still potential in terms of the associated time-savings involved (about 20%). To automate the process for more complex KYC cases and thus all client groups, all regulatory requirements must also be integrated into the process in addition to the technical know-how and an efficient processing.
This is where Deloitte comes into play. Deloitte Managed Services (DMS)integrates the regulatory know-how of the worldwide Deloitte network and expands the existing Finform solution using applications from different software partners. Through the DMS platform, Deloitte can ensure compliance with regulatory requirements in different countries and for more complex KYC cases. Customer relationships with increased risks can be identified reliably and the additional investigations carried out effectively.

Micha Bitterli
“Integrating the comprehensive regulatory guidelines into the automated process makes life easier for both the relationship managers and the compliance officers who manage the control activities. And since the process of opening an account is more streamlined, this also increases customer satisfaction”,
says Micha Bitterli, Head of Deloitte Managed Services in Switzerland. He adds,
“Deloitte and Finform complement each other perfectly. With Finform our customers benefit from a partner which is completely dedicated to automating the KYC process. In turn, as part of this partnership Deloitte Managed Services focuses on automating the more complex client relationships, which take up about 80% of the total time needed for handling the process manually.”
René Oppliger
René Oppliger, CEO of Finform, is convinced,
“The partnership with Deloitte enables us to go one step further in terms of standardising and automating the compliance regulations for banks. The service offered by Deloitte is also now available for wherever we can’t assume responsibility for the regulations being adhered to. This is further proof that the days are gone when every change to the regulations entailed a lot of effort and costs for financial institutions in adopting them.”
Finform was founded with the participation of one of the biggest retail banks in Switzerland with the task of significantly minimising the effort associated with opening a customer account. Finform concentrates on taking the burden posed by the compliance formalities away from the banks as much as possible.
Deloitte Managed Services is a compliance platform whereby all the relevant impacts of worldwide regulatory requirements on financial service providers are identified and solutions to them can be developed. Information on essential compliance processes and functions can be obtained from this platform and the desired cost advantages therefore achieved.
Regulatory compliance is mandatory, but it is also non-differentiating and is becoming costlier. Deloitte believes that the solution to this challenge for banks is in sharing these increasing costs among various market participants.

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Fintech Switzerland 2017 in Review

The Swiss fintech ecosystem experienced significant growth in 2017, aided by a supportive regulatory framework, traditional financial players’ willingness to collaborate with startups, and new international fintech agreements.
As of December 2017, the Swiss fintech scene had 209 startups, according to Swiss Fintech Map by Swisscom and eForesight. Most of these startups are operating in the areas of investing and asset management (57 startups), crowdfunding (46 startups), cryptocurrrency and blockchain (28 startups) and payments (21 startups).
In particular, Zurich is quickly emerging as Switzerland’s fintech hub. Zurich is the country’s largest city and the largest financial center. It is already an innovation hotspot that many believe is on the fast track to become a standout European tech hub.
Here are some of the most important events that happened this year in the Swiss fintech space:

New fintech regulation
Image: Regulation by Nick Youngson via Creative Commons Images
On July 05, 2017 the Federal Council adopted revised banking regulations. The new regime formally entered into force on August 1st, 2017 and is set to simplify crowdfunding, payment processing services as well as other business models that comprise the acceptance of funds from the public.
The amended rules provides for an special exemption that allows companies to hold funds in a settlement account for 60 days without the operation of such account being deemed an acceptance of public funds subject to licensing under the Banking Act. Additionally, companies are now allowed to hold public deposits of up to CHF 1 million without having to obtain a banking license.

Finance minister goes on Asian tour
Ueli Maurer, Switzerland’s Head of the Department of Finance, via Wikipedia
Swiss finance minister Ueli Maurer traveled across Asia in April to meet with ministries and authorities, state institutions and financial players in Beijing, Shanghai, Hong Kong and Singapore. Talks and meetings were primarily centered on bilateral and multi-lateral issues, as well as specific fintech cooperation at the state and private sector levels.
The aim of the visit was to foster collaboration with foreign players and jurisdictions to boost fintech innovation and facilitate the expansion of Switzerland’s fintech startups into the Asian continent.
Along the same line, the Switzerland Greater Zurich Area AG signed a Memorandum of Understanding (MOU) with the Fintech Center of South Korea in September. The agreement aims to enable fintech South Korean startups to expand to Switzerland more easily and build friendly fintech ecosystems in both countries.
Other international collaborations that were signed this year include the alliances between the Swiss Finance + Technology Association and the Abu Dhabi Global Market as well as with the Fintech Association of Hong Kong, a collaboration between the Australian Securities and Investments Commission (ASIC) and the Swiss Financial Markets Authority (FINMA), and a MOU signed between the finance ministries of Switzerland and Israel.

Swiss fintech startups go global
CreditGate24 unveiled plans to expand to Germany, Europe’s biggest economy. The startup, which offers a peer-to-peer lending platform, is planning to open its first branch outside of Switzerland in Berlin. It has already installed a team in the German capital. Also Loanboox, a lending platform for communal cities recently made the move to Germany.
Zurich-based Avaloq, which provides cloud-based solutions for more than 150 international banks worldwide, is looking to expand to Hong Kong, mainland China and the US in coming years before seeking a stock market listing, possibly in Hong Kong, the company said in October.

Financial regulator investigates ICOs
Image via Pixabay
FINMA is closely monitoring ICO activities as Switzerland is quickly emerging as a preferred location for cryptocurrency and blockchain startups to host their fundraisings.
FINMA issued guidance on ICOs in September shortly after the authority shut down the provider of an alleged fake cryptocurrency.
The QUID PRO QUO Association had provided so-called E-Coin for more than a year and had amassed funds of at least CHF 4 million from several hundred users.
At the time, FINMA said it was investigating around a dozen other possible fraud cases.

Featured image: Switzerland scenery, Pixabay.
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SME lending platform Finiata closes €18 million financing round

€10 was directly invested by existing investors including Redalpine, DN Capital, Point Nine and Fly Ventures. ENERN, the largest Czech VC, and Kulczyk Investments joined as new investors, adding a wealth of local expertise and network in Finiata’s target markets. An additional €8 million has been raised in the form of debt financing, making it one of the largest financing rounds for an early-stage FinTech company.

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Digital Identity and the Future of Money

Biometrics and behavioural biometrics are undoubtedly going to become the most common forms of identifying users. Access to devices and applications will be critical to secure the enterprise and the continuation of simple single factor password authentication will eventually be superseded, as the risks posed by employing single factor authentication will be seen as too great.

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Top 7 financial services trends that will dominate 2018

Brickendon, the challenger consultancy, forecasts key trends impacting the financial sector next year
Without a doubt, 2017 has been a rocky year for financial services; with political upheavals, economic uncertainty and planning for numerous regulatory changes coming into effect in 2018.
In 2017, Brexit was the talk of the town, with “uncertainty” a word bouncing around the finance sector. As such, the key focus was on the financial services industry crafting their post-Brexit strategy, namely how to continue having access to both EU and UK markets and in turn catering to their clients’ needs.
According to Brickendon the award-winning global management and technology consultancy, while political events will continue impacting financial services, including Brexit negotiations, next year digitalisation and data will dominate alongside Robotic Process Automation and Blockchain, making larger waves in the sector and paving the way for uncapped growth and innovation.
Financial Services Trends

A Data Future. Access to it, and the ability to mine data, will be central to everything that happens in the future of financial services. Now that the data is loaded, and the toolsets are understood and available, 2018 will see it being used for operations and technology processes.
The Rise of Robots. Robotic Process Automation (RPA), which uses software robots or ‘bots’ to mimic human activity, has the potential to unlock yet more value by freeing up employees to focus on value-added work – ultimately transforming the way the financial services sector operates. In 2018, we will see how this will impact RegTech, data analytics and ultimately how organisations service their clients. A gamechanger for the industry will be the start of the processes to replace people with robotics and machine learning.
The Reality of Blockchain. The use of the distributed ledger technology will no longer be just hypothetical. The opportunities for financial services who invest in such technology are endless from reducing operational costs to improving efficiency.
Simplifying Digitalisation. Business is becoming more about the user experience. Automated user interfaces can go a long way to helping this and embracing digitalisation is key in making it happen. The upcoming year will be all about the simplification of processes and digitalisation.
The Changing Political Climate. Brexit will remain a buzzword and continue to make headlines. As more details of the UK’s departure from the EU become clear, we will see banks and institutions adapting accordingly. Many will have to keep a close eye on their strategy if they are to survive and thrive in 2018.
Banking Regulations. 2018 will be a turning point for financial regulation. Alongside General Data Protection Regulation (GDPR) and Markets in Financial Instruments Directive (MiFID II), the requirements for central clearing and the second Payments Services Directive (PSD2) will force significant changes to the banking environment, with the innovators and disrupters emerging as the winners.
FinTech Collaboration: One of the largest technology shakeups in banking in recent years has been the use of advanced data analytics techniques to catch rogue trading activities within banks. In 2018, banks will have to decide whether to service clients in house or through a third party to stay competitive.

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