COVID-19 Takes an Enormous Toll on Swiss 'Crypto Valley'

The president of the Swiss Crypto Valley Association, or CVA, said that the Coronavirus pandemic had a major impact on the local crypto ecosystem.

A recent report claims that the representatives of nearly 80% of crypto valley’s firms said they will most likely go bankrupt over the next six months. Crypto Valley Association president Daniel Haudenschild explained to Cointelegraph what the survey means for the Crypto Valley Startup ecosystem, he said:

“The information has been built from a smaller sample size however it certainly seems to mirror the sentiment that we feel in the market.”

A dire situation

The report — which is based on the answers from 203 crypto valley firm representatives — also claims that 88.2% of the firms will not be able to weather the pandemic without government aid. Furthermore, 56.9% already had to lay off employees and 90.7% expect to do so in the future. Haudenschild expects the coronavirus to have long-reaching consequences for the local crypto ecosystem:

“There will be a twofold effect. The first is that businesses will have to find a way to survive.  Given that many were just emerging from the effects of a long crypto winter, this double punch will be hard for many to emerge from. The second effect will be that everyone is being forced to go digital.”

To help the crypto valley’s firms, the CVA is available to share information with the companies about how to get help — financially or otherwise. Unfortunately, the report also notes that 68.3% of the crypto valley startups that requested a COVID-19 loan did not receive one. Haudenschild pointed out that most of the effort needs to be done by the businesses that have to re-invent themselves. He also said:

“We have extended all memberships by six months, to allow members to focus on the priorities of getting their house in order. Our new HiveBrite site is also giving members a great method to communicate important events and information in these crisis times.”

A push for a quick change in the right direction

The CVA president explained that real-life meetups and conferences do not take place any more. Instead, they happen online as do pitches and other venture capital activities. He also sees a silver lining in this switch, as “this will ultimately prove that crypto is one of the most resilient industries and will be one of the first to emerge.” Overall, he believes that post-pandemic, crypto valley will be stronger than ever before:

“It will be better. It will be more decentralized, it will be more international, and it will be more online. The ecosystem will be stronger and a better place for the exchange of ideas.”

According to Haudenschild, the current situation is largely caused by businesses being forced to go digital. Because of this, he says, companies have marketing budgets that are not being used and stories that are not being sold. Still, he says that change is coming fast:

“Meetups and aperos networking events are all happening online. The CVA is already hosting the type of events that many will turn to in order to get in front of their constituents and customers.”

Haudenschild believes that this change will not be limited to the cryptocurrency ecosystem. According to him, businesses around the world will rework their supply chains to adapt to a new way of life which has more use for cryptocurrencies:

“The world is going to take a critical re-think on just about everything. There are already some obvious challenges. [...] This re-think will extend through to supply chain, manufacturing, sourcing, and just about every industry sector. Ultimately crypto business and blockchain will be more important in the future, not less.”

Not the first strike against the Swiss crypto valley

As Cointelegraph reported in late January, a report from CV VC noted that the combined valuation of crypto valley’s top 50 cryptocurrency firms was slashed by nearly half in 2019 amid the Ether (ETH) price devaluation.

Still, Haudenschild remains largely positive when it comes to the future of the local and global crypto ecosystem. He told Cointelegraph that the economic pains that people are paying little attention to because of the ongoing pandemic could, in fact, lead to rapid cryptocurrency adoption, especially when combined with Bitcoin (BTC)’s halving:

“Interestingly enough, in this time of crisis, the BTC halving and the oil price war have gone almost completely unmentioned. These are major occurrences, and they will have an impact on asset management pushing digital asset adoption. The methods of the central banks to steer fiscal policy through printing money is limited and its toolbox has not been topped up since the global financial crisis. Many will start to wonder how much pressure these currencies can endure. There may well be seismic shifts to digital asset adoption as a result.”