Blockchain and cryptocurrencies in Sweden

Blockchain and cryptocurrencies in Sweden

The Swedish economy is well-developed and export-oriented. In the twentieth century, a poor agricultural country turned into one of Europe’s most developed industrial states in several dozens of years. It was rich natural resources that affected the economic growth. They still play an important role in export, but the authorities of Sweden are now equally focusing on knowledge-intensive industries based on information technologies.               

Blockchain projects in Sweden 

Sweden was one of the first in the world to launch a project on developing the national land cadaster on blockchain: it happened in 2016 and was highlighted by such leading globally renowned mass media as The Wall Street Journal, Nasdaq, and Fortune. For this purpose, Lantmäteriet (a cadastral body of Sweden) united together efforts with the ChromaWay blockchain startup, Telia telecommunication company, and Kairos Future consulting firm. Afterwards, they were joined by SBAB Bank, Landshypotek Bank, Svensk Fastighetsförmedling real estate agency, and Evry IT company.             

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The development started immediately, but the third blockchain project test phase completed only recently, in June 2018. The companies made a presentation showing the way of customers’ checking of digital signatures approved by the government and the way of final sending of legal contracts.          

The seeming slowness means the general attitude of the authorities and businesses to blockchain: both do not aim to integrate the technological novelty as soon as possible, but they rather prefer to explore completely the efficiency of the idea and eventually create a 100% reliable off-the-shelf product.     

Blockchain has found its application in the Swedish business sector. Dozens of blockchain companies engaged in various areas were established across the country. Founded in 2014, ChromaWay has established its own blockchain platform to develop various software solutions, from databases to investment platforms. Safello offers a platform for cryptocurrency processing and purchasing, providing the Nasdaq level protection. Quickbit allows citizens to buy cryptocurrencies using bank cards. Nordbloc has integrated blockchain-based KYC solutions. Superblocks is developing smart contracts for its customers. Enigio Time and Nikka System focus on the IT security of blockchain solutions.              

Big Fish on board  

The emergence of new blockchain solutions as a part of the Swedish IT market will require a huge computation power. Therefore, the country cannot do without data centers. One of them will be established in Stockholm, according to Amazon. The company is going to adjust it to Amazon Web Services.      

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Another IT giant, Google, has also become interested in Sweden’s cheap electricity and favorable investment climate. The company acquired 109 hectares of land in Horndal, Avesta Municipality. Google’s official representatives say that the company is going to place their data centers there.     

Two giant data centers from leading IT companies will cement the country’s place as a leader in the European IT infrastructure and cloud technologies.  

About cryptocurrencies and not only 

Despite the fact that the authorities have not enshrined the cryptocurrency status at the statutory level, Sweden provides a beneficial jurisdiction for crypto business operations. The country’s Financial Supervisory Authority (Finansinspektionen) has actually legalized digital assets by publicly announcing the recognition of Bitcoin as a payment method.     

Meanwhile, the Finansinspektionen explains that crypto companies interacting with fiat currencies (especially currency exchange offices and exchanges) are obliged to get licenses and permissions, as well as comply with all the rules and regulations of AML, CTF, and KYC.     

Such an attitude of the Swedish authorities has mainly destined the country’s leading position in terms of cryptocurrency distribution in Europe. In 2014, long before the cryptocurrency boom, a Swedish citizen Mathias Sundin became the first politician to raise funds for his election campaign in cryptocurrency, while Sweden-based BTCX Exchange started operating in January 2012.  

Wall Street has got nothing on Sweden 

Besides, cryptocurrency derivatives appeared in Sweden way before Bitcoin entered the Wall Street. In 2015, inhabitants of Sweden could buy an asset called Bitcoin Tracker One backed by Bitcoin. This asset passed the inspection of the Finansinspektionen and was traded at NASDAQ/OMX in Stockholm. Thus, the Scandinavian country was the first in the world to invest in Bitcoin derivatives. It was performed via the bank or online broker. Asset holders had the right to exchange it for 1 BTC at the rate of 1:1.           

Is E-Krona scam?  

In 2016, the Swedish authorities officially announced the development of national cryptocurrency called E-krona. Such a step was encouraged by the fact that locals conducted 85% of all transactions using cashless transfers. However, the Swedes were unenthusiastic regarding this initiative. According to the survey made by Sifo Research Center, only 10% of citizens approved the launch of crypto Krona.          

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However, the idea of developing national cryptocurrency was the factor resulting in the hype. The international crypto community was extremely worried of such an event, which was a great opportunity for swindlers.    

In early 2018, one launched a previously unknown project called Kryptonex, and with it the Coinvest news website that copied the interface of the well-known cryptocurrency portal – CoinDesk. The fake website published the “news” about Kryptonex, along with the Swedish authorities, launching national cryptocurrency. That false report was parroted by many specialized mass media and distributed all over the world.       

Nevertheless, the fact that Kryptonex has not issued crypto Krona does not mean the Government of Sweden refusing the idea of developing national cryptocurrency. The project is under development: it involves the Central Bank of Sweden as well as ChromaWay and Sofitto. No one knows when their plans will come true.        

Mining: iron or cryptocurrency? 

If upon hearing about mining in Sweden, you immediately think of famous local iron ore mines, that’s fine. However, we are talking now about mining of cryptocurrencies rather than iron.

To tell that the power industry is well developed in the country means to say nothing. Sweden has three nuclear facilities (all together ten reactors) and about 1900 hydropower plants. Moreover, the authorities encourage entrepreneurs to use wind and solar power plants: taxes are reduced by 98% for such electricity manufacturers. Certain Swedish regions have completely shifted to renewable power sources.       

Therefore, the country offers one of the lowest electricity rates in Europe: 6.5 eurocents per 1 kWh in Sweden against 11 eurocents per 1 kWh in average across Europe.     

Economy power and north climate provide beneficial conditions for cryptocurrency mining. World’s largest brands, such as Bitmain, are considering a possibility to place their data centers in Sweden. By the way, Canada’s HIVE has already established a major farm in Boden in order to mine Ethereum.          

ICO: to be or not to be?  

Similar to the cryptocurrency issue, the Swedish authorities have not approved any legal standards to regulate token sales. However, the Finansinspektionen has published a statement, warning investors of danger related to ICO investments. According to the regulator, this sector has at least five challenges:      

• The absence of rights. A token holder won’t be able to lodge a claim against the emitter if the latter fails to fulfill their obligations.  

• The absence of fair valuation of assets. The regulator believes that token prices cannot show the fair market value of assets.  

• One does not guarantee an access to the secondary market. It is noted that the asset can fail to enter the crypto exchange and to draw somebody’s interest. 

• The absence of information. The regulator warns that there are no requirements for ICO projects, obliging them to disclose their total information.  

• Fraud risk. The Finansinspektionen reports that ICO authors can aim to raise as much money as possible instead of developing the project.    

At the same time, despite all the complaints of financial regulator against ICOs, token sales are not prohibited within Sweden. Therefore, any project has an opportunity to raise funds for its growth by launching digital tokens. 

What is the result? 

Instead of integrating blockchain anywhere, both businesses and authorities examine pros and cons of technologies, check their efficiency, and only then apply new solutions.   

It is the most advantageous country for mining, taking into account cheap electricity. Besides, the early adoption and distribution of cryptocurrencies have affected the public awareness concerning cryptocurrency payments.  

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Sweden does not create any barriers to ICOs: any company can launch its token sale without being afraid of harassment by government agencies.  

All these facts mean the only thing: Sweden’s careful and systematic approach to technological novelties has made it a leader in the European IT industry.  

So, what will the country face in future? What novelties will the Swedish blockchain community use in the coming years? How will the country’s authorities protect crypto community interests? You can receive answers to these questions first hand only at specialized events dedicated to blockchain, cryptocurrencies, and ICOs. One of them, Blockchain & Bitcoin Conference Stockholm, will take place on September 11 in the capital of Sweden.     

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