Crypto Privacy in Jeopardy: Switzerland’s New Surveillance Laws Threaten Web3 Projects
Switzerland has long been regarded as a sanctuary for privacy, attracting a range of companies, organizations, and crypto projects looking to safeguard user data from increasing global surveillance. However, recent proposals by the Swiss Federal Council could challenge this reputation, particularly for decentralized crypto projects that have taken root in the country.
Proposed Surveillance Changes Could Threaten Crypto Privacy
For years, Switzerland has been a privacy haven, largely due to its strong constitutional protections, neutrality, and absence of US or EU jurisdiction. This environment has been especially appealing to Web3 projects like Nym, Session, and Hopr, alongside privacy-focused services like Proton and Threema, which have established operations in the country.
But a recent revision to Switzerland’s Ordinance on the Surveillance of Correspondence by Post and Telecommunications (OSCPT), proposed in January, has raised alarm bells. The change would expand surveillance requirements to include VPNs, social networks, and messaging apps, potentially forcing them to identify users and decrypt communications. For companies serving at least 5,000 users, the new regulations would make privacy protection more difficult, signaling a potential shift in Switzerland’s privacy stance.
The Crypto Industry Pushback: A Fight for Privacy
The proposed changes have sparked significant backlash from the privacy community. Proton CEO Andy Yen has threatened legal action and even the possibility of pulling out of Switzerland if the ordinance goes through. Meanwhile, decentralized VPN provider Nym is calling for Swiss citizens to voice their opposition to the plan.
Alexis Roussel, Nym’s Chief Operating Officer, said, “This ordinance directly endangers the people who use these services,” expressing concerns about the broader impact on the privacy sector. Similarly, Sebastian Bürgel, Vice President of Technology at Gnosis, argued that the move would likely backfire. “If the intent is to limit privacy, services like Proton Mail and Proton VPN might leave Switzerland, but the consequences will affect everyone,” he explained.
Are Swiss Crypto Projects at Risk of Regulation?
Despite the new regulations, decentralized projects like Hopr and Nym argue that blockchain technology might offer a solution. According to Ronald Kogens, a partner at Swiss law firm MME, truly decentralized Web3 activities should be exempt from the new laws, as they do not operate centralized infrastructure that could be targeted by surveillance laws.
The decentralized nature of platforms like Hopr means that even if Swiss authorities were to force them to comply with the regulations, the network itself could not be monitored. Hopr Association has made it clear that it cannot provide user data to the government, as its infrastructure is spread across independent node operators, ensuring anonymity and privacy.
The Future of Privacy in Switzerland: Will the Crypto Industry Prevail?
The public consultation period for the proposed changes is open until May 6, giving Swiss citizens the chance to weigh in. Kogens suggests that if the proposal is passed in its current form, it could drive a significant shift in how users approach privacy, potentially steering them toward more decentralized solutions.
Despite these challenges, Bürgel remains optimistic. “More surveillance is bad for everyone, and as people become aware of this, the demand for decentralized solutions will only grow,” he stated. The future of privacy in Switzerland, and potentially the wider crypto space, may depend on how well the industry can push back against these surveillance efforts and preserve the core principles of decentralization.
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