In fact, the Vice President of the Swiss Blockchain Federation publicly expressed his concerns about the difficulties the industry is experiencing during this pandemic.
Switzerland has been a breeding ground for blockchain startups. Favourable legislation, tax exemption from cryptocurrency investment income, innovation and a streamlined bureaucracy have attracted many initiatives.
The sector is now experiencing its first crisis, Covid19 has delivered a severe blow during one of the most delicate moments for blockchain companies.
Lorenz Furrer, vice president of the Swiss Blockchain Federation, says:
“It could be that Crypto Valley becomes a Death Valley”.
Between March 31st and April 3rd, the federation conducted a survey of 800 companies, of which 200 responded. With 88%, four out of five said they were in a tough spot.
At a time when Internet-related technology seems to be the only one working thanks to teleworking platforms, online meetings, e-commerce shipping and the entertainment industry, the most cutting-edge sector in the IT and high-tech world is suffering.
More than 4,000 people are employed in Switzerland alone, with the top 50 companies totalling around $25.3 billion, according to the investment company blockchain Zug CV VC.
However, many startups are currently not generating enough revenue to stay afloat in 2020. Very often the launch goes through scalar investment steps, and raising funds at this stage has become difficult.
“The health crisis has made the task much tougher”, said Ralf Kubli, director of CV VC. The pandemic is also making it difficult for mature startups to develop the customer relationships they need to grow their business.
Entrepreneurs who are open to the use of new technologies, all of whom would have invested in innovation to make processes more efficient or develop new markets, are now struggling with the problems caused by the lockdown and are postponing their operations to a later date.
Switzerland: Crypto Valley’ issue due to Covid19
The cancellation of industry events has not helped, in fact Daniel Haudenschild, President of the Crypto Valley Association observes:
“So much of the blockchain ecosystem hinges on coordinated efforts between platforms, networking and attending conferences”.
Blockchain events and meetings have always been the basis on which awareness of the potential of this market is built. From when a product is launched to when the potential of a technology is explored, the inability to meet and network is strongly affecting this industry.
In this phase of uncertainty, there will be a big squeeze. Those who have resisted and shown the necessary resilience will find themselves with a larger market at the moment of recovery.