Heinz Tännler, Zug’s finance director, requested for a CHF100 million ($103 million) relief package for the blockchain industry last month. Tännler argued that local blockchain companies also deserve a stimulus package like other fintech startups, as the coronavirus pandemic had severely affected their businesses as well. According to a report by local German-language newspaper Tages-Anzeiger, Tännler’s proposal has been rejected by the Zug government council. The report says that out of a dozen sectors that requested relief package, blockchain was the only one whose request was denied.
Blockchain startups in Switzerland suffer because of the pandemic.
The news deals a major blow to the blockchain industry. With COVID-19 bringing many economies to a standstill, Switzerland hasn’t been spared, and Crypto Valley’s startups have been among the worst hit. According to a report published last month, 80% of blockchain startups in Zug were likely to go bankrupt in six months. The Swiss Blockchain Federation reported that close to 60% of the startups had to dismiss their employees, and those who applied for COVID-19 relief, only about 30% were granted.
Fintech startups receive a $159 million COVID 19 relief package.
Even though blockchain startups have been denied a relief package amid the pandemic, other fintech startups have been taken care of, with the Swiss federal government issuing a $159 million relief package for this sector. Crypto Valley’s startups’ viable option now is to apply for a loan from a commercial bank, with the federal government covering 65% of the loan as the Canton of Zug covers the other 35%. According to the report by Startup Genome, 74% of startups globally have had to terminate some of their full-time employees, and only 41% of the startups have enough to run for three months. The coronavirus pandemic has brought the world’s economy to a standstill. The world trade organization had predicted that global trade would fall up to 32% this year.