The Swiss government reportedly rejects the $103 million bailout plea crypto companies sought to alleviate the severe impact of COVID-19.
Businesses in Switzerland’s “Crypto Valley” have failed to secure loans worth 100 million Swiss francs (about $103 million), according to local news published Wednesday.
Tages-Anzeiger, a news publication based in Zug, reported that a bailout plan drafted by Heinz Tännler which sought assistance for blockchain startups, had not been successful. Tännler is the finance director of the Swiss canton of Zug.
According to the report, this was a call for the government to help crypto startups in the region get funds to cushion the blow delivered by the COVID-19 pandemic. It proposed that the package be tailored into a sovereign wealth fund, with 10 million francs distributed to blockchain startups in the form of loans.
The credit advanced to crypto companies through the wealth fund would then have been converted into shares, Tages-Anzeiger reported.
Zug finance chief sought additional funds
Tännler placed a request for the stimulus package to add to the CHF 154 million that was rolled out in April.
Although the government’s package targeted fintech companies, Tännler stated that the cash injection (worth $158.6 million) would not be enough to help crypto startups facing a cash crunch as a result of the current economic turmoil.
According to reports in local media outlets, the wealth fund was set to have benefited from several funds and local contributors from the Zug region. Among those set to contribute were Zug’s local government, private investments, and federal guarantees.
In April, the Swiss Blockchain Federation warned in a survey report that 79.8% of crypto startups in the Crypto Valley would “likely go bankrupt in the next six months.”
Of the 160 crypto firms, 88.2% noted that only government aid would save them from shutting down because of an economic collapse caused by coronavirus.
The report also revealed that 68.3% (over two-thirds of companies that applied for the government loan), had not secured the funding they had hoped for, meaning they needed to seek funds elsewhere in order to survive.
Heinz Tännler is also a member of the Swiss Blockchain Federation, which has warned that “Crypto Valley and the entire Swiss blockchain scene face an existential danger due to the restrictions and uncertainties caused by the corona pandemic.”
Crypto-friendly Zug is an innovation hub that has attracted a huge number of blockchain startups for its regulatory approach that encourages new investment in the sector.