Comprehensive insights on digital currencies in Switzerland: regulations, adoption rates, and prominent players in the industry
Swiss Folks Prefer Cold Hard Cash, Yet Embrace Crypto Tech
Swiss residents love their physical cash, but weirdly enough, they're also deeply involved in blockchain and crypto technology. This paradox might leave you scratching your head, but let's dive into the world of digital currencies and understand why.
First off, what's the deal with cryptocurrency?
It's a digital form of currency, and unlike your physical cash or coins, it doesn't take up space in your wallet or exist in a tangible form. Instead, it lives in a virtual realm as part of your financial assets. One main difference from traditional money is that cryptocurrencies are not controlled by banks or governments. But that doesn’t mean they're completely unregulated; Switzerland has the Swiss Financial Market Supervisory Authority (FINMA) ensuring digital currency users comply with money-laundering and financial transparency regulations.
Now, let's break down some cryptocurrency lingo you might've heard:
Bitcoin:
The OG digital currency, Bitcoin is essentially the digital equivalent of gold. To buy one Bitcoin (BTC), you'll need around 93,000 Swiss francs (though the rate may fluctuate).
Digital Wallet:
Your digital vault where you can securely store and manage your cryptocurrencies.
Blockchain:
A digital ledger that documents transactions and creates a verifiable chain of data.
Mining:
Don't grab your hard hat just yet! This is a process of creating new digital coins by solving complex mathematical problems, not digging underground.
Here's what else you need to know about cryptocurrency in Switzerland:
Where can you purchase cryptocurrency?
You can buy it through online exchanges that support transactions in francs. Typically, they offer a variety of payment methods, including bank transfers, credit cards, and even Twint.
Where in Switzerland can you pay with Bitcoin?
While the majority of merchants stick to traditional forms of payment, around 144 stores in the country (more than anywhere in Europe excluding the UK) accept Bitcoin. Check out this list here to find stores that accept crypto-payments.
In these types of transactions, the payment is transferred directly from your digital wallet to the merchant's.
Paying Your Bills
Some Swiss Bitcoin service providers, like Bity and Mt Pelerin, offer online bill payment services that let you pay bills using Bitcoin. As of 2021, the canton of Zug also accepts Bitcoin for tax bills, and the canton of Ticino accepts it for certain services. Additionally, Swiss health insurance provider Atupri gives you the option to pay your bills using Bitcoin.
Taxation in Switzerland
Yes, cryptocurrencies are subject to taxes, and they are treated as investments. However, it's not as simple as declaring capital gains or losses. According to Postfinance, government-owned bank, "crypto investments must be declared in the list of securities and assets, along with the cryptocurrency's name. Most crypto platforms offer a tax statement that can be used as supporting documentation. The tax statement includes specifics such as assets, transactions, and gains." But if your platform doesn't offer a tax statement, take a screenshot of your wallet on December 1st for a year-end evaluation.
For most investors, capital gains made from trading do not influence their income tax. However, income from mining must be declared as income, and the market value of the mined cryptocurrency at the time it was acquired should be used for tax returns. In terms of wealth tax, your cryptocurrencies are considered taxable assets. Like other securities, the Federal Tax Administration (FTA) determines the tax rate using the end-of -year average exchange rates from various trading platforms.
- Despite their preference for physical cash, Swiss residents have a deep involvement in blockchain and cryptocurrency technology.
- To buy Bitcoin, one of the most popular cryptocurrencies, you would need approximately 93,000 Swiss francs, and it is treated as an investment for tax purposes in Switzerland.
- Cryptocurrency transactions in Switzerland can be made through online exchanges that accept francs, and some stores accept Bitcoin as a form of payment.
- Income from mining cryptocurrency in Switzerland must be declared as income, and the market value of the mined cryptocurrency at the time it was acquired should be used for tax returns.
