One of the world’s top cryptocurrency lawyers has called out the Swiss ICO model as “old, inflexible [and] stupid”. And he was the one who designed it.
Luka Mueller and his law firm MME have been the legal brains behind some of the best known ICOs, including Bancor and Ethereum. The model they developed includes setting up a non-profit foundation in Switzerland and treating money raised in ICOs as donations.
This distinction is important as under Swiss law donations do not have to be returned.
The Swiss Picture
This structure was set up to protect developers from litigation, and has proved wildly popular. Now around one quarter of all ICOs are based in Switzerland.
Mueller now believes that though foundations are useful for projects attracting a small tech community, they are inappropriate for many ICOs. “The Swiss foundation actually is a very old, inflexible, stupid model,” he said, adding that it is “not designed for operations.”
Problems arise when ICOs attract a larger investor audience, investors who might expect some kind of protection, as they do in IPOs.
The Swiss economist Alexandre Swoboda outlined to Reuters the problem for investors: “holding those new coins doesn’t give you a claim on anything,” he said, “except to be part of the club that holds those coins.”
Mueller suggests that if an ICO is aimed at investors it should take on a different form. If, “the background is more an investor environment rather than a technical environment, yes, do all the registrations,” adding that “If you want to sell it, if you want to be active and actively promoting it in the US, apply U.S. law.”
Switzerland is keen to maintain its position in the ICO world. Last week the Swiss international finance secretariat announced a “blockchain/ICO working group” to review ICO legislation to “increase legal certainty, maintain the integrity of the financial centre and ensure technology-neutral regulation.”
They added that these clarifications were necessary to “ensure that Switzerland remains an attractive location in this area.”