Swiss politician asks government to create report on bitcoin

A member of Switzerland's federal parliament has made a submission to the country's National Council asking it to write a report on bitcoin.

Jean Christophe Schwaab of the Swiss Socialist Party said he submitted the request because he is concerned about the potential of bitcoin.

"It's difficult to know at this stage exactly what bitcoin is and what it is capable of becoming. That's why I want the government to look at the bitcoin market and and what the dangers are," he said.

Schwaab went on to say he thinks there is real danger of bitcoin enabling money laundering and other criminal activities to take place in Switzerland, however, he conceded that the digital currency could also end up doing good for the country.

"At the moment, I have no idea, but a Swiss journalist recently bought drugs from Silk Road using bitcoins, so I think the state needs to make an intervention," he added.

Schwaab is unsure about what kind of intervention is necessary, but said the first step is for the government to do some research and create a report on the topic assessing its dangers, advantages and the opportunities it could create. He added:

"After that, we can decide what measures are necessary – whether bitcoin should be forbidden or regulated and if that is the case, could Switzerland alone make a regulation, or should Switzerland cooperate with other countries that are making regulations?"

The next session of the Swiss parliament is in November, so Schwaab expects to hear then whether or not his submission has been accepted.

Raising awareness

The 34-year-old said bitcoin came to his attention because he has a strong interest in internet policy, data protection and new online trends. He has also come across bitcoin in his work as a unionist for bankers – he is on the executive board of the Swiss Bank Employees' Association.

However, the majority of Schwaab's colleagues in parliament aren't as aware of digital currency as he is: "I'd say 90% of the Swiss parliament has no idea what bitcoins are. I think that the majority of the government has no idea either, because it's so new."

He even went as far as to say the only people in Switzerland who know about bitcoin are "geeks, criminals and special police units" and that there is currently very little or no public discussion about digital currency.

"I don't agree at all with what Mr Schwaab says," said Giorgio Massarotto, CEO of Switzerland-based bitcoin mining hardware producer Bitmine. He added:

"Bitcoin is an emerging technology that was born from geeks but will eventually become part of everybody's life as soon as it evolves into a more well known and user-friendly technology."

He went on to say it is only a matter of time before the Swiss press starts to report on the numerous benefits of bitcoin, rather than focusing on the negative aspects Schwaab mentions.

Despite Massarotto's difference of opinion with Schwaab, he believes the politician's submission to parliament is a positive move for bitcoin. He explained: "It is good news because it is the start of a discussion and it will attract more interest from the other political parties too.

"Switzerland's approach to monetary regulation has historically been very liberal, so I don't think it will be much different for bitcoin than it has been for other currencies or commodities."

Switzerland's existing alternative currency

Switzerland is no stranger to alternative currencies, or even electronic currencies. The WIR franc – a private, electronic currency issued by WIR Bank - has existed in the country since the 1930s. This is used in transactions between companies in conjunction with the Swiss franc and serves to reduce the amount of cash the buyer has to have in order to make a purchase.

The currency is fully asset-backed as WIR members pledge assets to secure the credit lines, which is one of its key differences from bitcoin.

Schwaab said the presence of the WIR franc in Switzerland has made Swiss people more open to new financial opportunities and means they are more comfortable with using different currencies whether they are fiat or non-fiat.

Massarotto, however, told us that the WIR franc's use is so limited that he doesn't believe it will have any impact on people's perception of bitcoin. He said Bitmine is doing everything it can, though, to raise bitcoin's profile in Switzerland and is working hard on developing the company's offerings.

It has been enjoying success of late, so much so that it is soon to stop taking preorders for its CoinCraft 28nm mining ASIC, as it is close to exceeding its production potential.

"I can tell you that we had more Swiss customers this time than with the sale of our previous Avalon-based miners, so that's an indication that bitcoin is becoming more popular in Switzerland," Massarotto explained.

He went on to say the project Bitmine is working on with the Shanghai Supercomputer Centre is moving very quickly and will "become a major player in the bitcoin mining world" in 2014.