Switzerland Based Crypto Valley Association Publishes Code of Conduct for Booming ICO Industry

The Crypto Valley Association (CVA), based in the epicenter of ICOs in Zug, Switzerland, has published a Code of Conduct for Initial Coin Offerings. Founded in 2017, the CVA started with just 16 members at launch and today now counts over 550 corporate and individual members.

The Code is representative of the rapid rise of ICOs becoming an effective vehicle to raise growth capital but the industry has been plagued by fraud and token offerings of questionable progeny. The Code covers both moral and legal obligations of issuers, as well as addressing security concerns. The CVA, a non profit entity, hopes to bring clarity and confidence to the digital asset class.

Oliver Bussmann, President of the CVA, said the explosion of innovation surrounding Blockchain and cryptocurrency technologies had propelled the number of issuers leveraging similar instruments to raise capital online.

“The Crypto Valley Association fully supports innovation in the blockchain space. We believe that token sales represent an exciting, sound and innovative approach to raising investment capital. Therefore, we believe Switzerland should support this trend by developing clear, comprehensible, yet flexible regulation that clarifies the legal status of ICOs and the tokens generated,” said Bussman.

The Code calls on any and all entities listing an ICO to be:

“fully transparent about all details pertaining to the process. Importantly, these details should be disclosed in a manner that can be easily understood even by those that are not technologically sophisticated. This includes being clear about how funds raised are intended to be used and how the token will function, as well as providing a clear risk assessment for the underlying technology.”

Luka Müller, Chair of the Policy & Regulatory Working Group of the CVA, which developed the draft Code along with a panel of experts, stated;

“The growth in popularity of decentralised applications and ecosystems, often launched as so-called ICOs, has caught the attention of regulators worldwide who want to be technology friendly, but also wish to understand the risks associated with the issuing, selling and transferring of tokens by clarifying their function, as well as their legal and tax status. In addition, because of the rise in popularity of ICOs, new categories of contributors participate who are often unaware of the true nature of their investment, and the documentation published to accompany token launches often minimizes or ignores the associated risk.”

The Crypto Valley Association is the independent, government-supported association established to take full advantage of Switzerland’s strengths to build the world’s leading blockchain and cryptographic ecosystem, working with government to foster the development of pioneering digital technologies in Switzerland and internationally.

The Code of Conduct for ICOs was joined by a general Code of Conduct for CVA members as well thus clarifying the values and best practices of the CVA. The group  hopes the document will help frame the way its members engage with the industry, thereby protecting their own reputation and that of the CVA.

Upon joining the CVA, each member must acknowledge having read and understood the Code of Conduct and that it will conduct its business consistent with the values and principles outlined in the Code. The declaration will be reaffirmed on an annual basis, with each member being asked to confirm that they did not breach the Code. It is intended that those breaching the Code will face disciplinary action. The CVA is currently welcoming comments from members and the general public on the content of the Code of Conduct.

“The rapid development of token launches has raised concerns around stability and security, and as a leader in this field, it’s our responsibility to support the industry. The widespread adoption of this framework, combined with careful supportive regulation would bring stability to an exciting but uncertain trend in blockchain,” added Bussmann.

Comments to the Code of Conduct will be accepted through 31 January 2018.


Mission and Policy Framework

(Version: 08 January 2018)

The CVA Policy Framework includes a set of Core Values, a General Code of Conduct (CoC) and a CoC for the creation of Decentralized Ecosystems (DECoC). Its goals are to frame the way Members pursue the Mission, to protect the reputation of the CVA and to create lasting value.

By becoming part of the CVA, each member acknowledges having read and understood the Core Values, the General CoC and the DECoC, and that it will conduct its business consistent with the values and principles outlined therein. The declaration is reaffirmed on an annual basis, complemented by an affirmation that the member did not breach the Codes. Ignorance of the Codes is no excuse in the face of a breach. The Codes are reviewed as needed and members informed accordingly.

1. Mission

  • Develop the World’s Best Ecosystem for Blockchain and other Distributed Ledger Technologies and Businesses.

2. Core Values

  • Trust

  • We understand the value of trusted relationships at all levels of the society and the economy, and strive to earn and keep the trust of all those with whom we interact.
  • Transparency

  • We are transparent in our dealings and protect personal privacy. We look for the same in those with whom we work.
  • Collaboration

  • We believe in the strength of enthusiastic cooperation and work to foster collaboration within our ecosystem and the wider community.
  • Integrity

  • We are honest in everything we do and take great care to maintain our integrity within our organization and in our dealings with others.
  • Innovation and Quality

  • We strive to be innovative in our work and to catalyze and support innovation in our ecosystem and the wider community. We are committed to achieve highest quality.
  • Security

  • We ensure the highest security standards in the work we do and carefully identify, assess, mitigate and control technological, business and societal risk.
  • Beneficence

  • We believe Blockchain technology should serve a useful and necessary commercial or social purpose.

3. General Code of Conduct (CoC)

  • A. Business Conduct

  • Members do their business in a responsible and transparent way, and do not engage in practices which would be potentially or factually damaging to the image and interests of the CVA and the ecosystem. Members adhere at all times to the Codes and, beyond it, to the applicable laws and regulations.
  • B. Diversity and Inclusion

  • Members do not discriminate in the work environment based upon race, color, gender, sexual orientation, religion, age, national origin, or disability.
  • C. Books and Records

  • Members ensure adequate and truthful operating and financial accounting as well as a proper system to record their business files. Members notify to the CVA any changes of their address, email, mobile number, domain name.
  • D. Property Rights

  • Members respect property rights of others, such as intellectual property rights, brand names or copyrights associated with any crypto valley related business.
  • E. Governance and Conflicts of Interests

  • Members implement in their organizations governance policies to ensure proper operation and control and to avoid (potential) situations of conflict of interest.
  • F. True and Fair Communication

  • Members commit to full, accurate, timely and understandable communication. In compliance with their confidentiality obligations, members are encouraged to disclose any form of mismanagement, corruption, incident, illegality, wrongdoing and any other serious infringements of the rules in force at the CVA or of national or local laws, to the CVA Board of Directors.
  • G. Breaches / Disciplinary Action

  • Members accept that any breach of the Code can result in disciplinary actions, which, depending upon the nature and severity of the breach, include written warnings, information and/or remediation requests, and – in case of serious breaches – expulsion from the CVA. The Members shall always have the right to be heard and costs shall be allocated to the Member depending on the disciplinary action decided.
  • H. Transactions

  • Members shall remunerate transactions on an “arm’s length” basis. Hence, any fees, salaries or “cost-plus“ mark-ups shall be comparable with third-party transactions.

4. Decentralised Ecosystem (DE) Code of Conduct (DECoC)

  • The CVA’s DECoC subjects all members to minimum standards ensuring that the launch and operation of DEs within the CVA comply with the highest level of ledger enforceability, quality of protocols and applications, and compliance to relevant financial market regulations.
  • A. DE Information

  • Members inform the community on their web interface, or any other communication channel, in a credible, objective and timely way about their DE and its innovative character, including about its technical features, development and financial plan, implementation timeline, benefits and risks (see below “B”), the management team, their professional background, their role in the DE, and about the legal structure, corporate organization and governance framework, storage and access of crypto assets – as applicable.
  • B. Risks Assessment and Disclosure

  • Members undertake, disclose on their web interface, or any other communication channel, and keep updated a full assessment of the risks related to the underlying technology (functionalities, protocols), the storage and access of private keys, the regulatory, compliance (such as KYC, AML risks), market and counterparty risks. The assessment shall be explicit about the mitigation measures implemented or foreseen and shall highlight the residual risk. The members ensure that all community members participating in the DE are fully aware of the risks associated with the specific DE.
  • C. Contribution and Distribution

    • C1. Pre-Blockchain Deployment Contribution
    • Members ensure that the pre-deployment contribution phase unfolds within a (preferably independent) audited corporate and technical structure that grants the highest protection and compliance levels to contributors. No public sale shall be allowed at this stage.
    • C2. Blockchain Deployment and Distribution
    • Members ensure that the blockchain deployment and subsequent distribution phase (secondary market) are subject to highly secured, fully compliant and documented, and independently audited technical allocation systems (such as smart contracts). Members shall exercise every effort to comply with the relevant regulations of the jurisdictions in which they actively distribute their DE.
    • C3. Minimum Contribution Disclosure
    • Members ensure all time transparency about the functionalities of the token (such as utility features, governance rights, counterparty, output and input functions), applicable regulations, issuance protocol and schedule, pricing mechanism, relevant taxation regime, contributor-based differentiations, sequential implementation of functionalities and listing plans, buy-back programs, existence of floors, envisaged burning and creation policy, treatment of any excess funding, and existence of lock-up periods for funds attributed to management.
  • Members seek direct or indirect regulatory contact as needed to guarantee best possible certainty.
  • D. Records Management

  • Members manage, trace and archive all transactions properly and according to prevailing laws and best financial practices. Members shall have a risk based policy in place on the KYC level they implement for the contribution and operation phase. The CVA regards it as best practice to have a minimum KYC procedure (name, address, id-scan, mail and/or mobile no) as well as an information of the source of funds procedure in place.
  • E. Suitability

  • Members make sure that the promotion of the DE is fair, clear and not misleading, and are proactive in helping contributors to understand the technology, the risks and rewards in relation to their specific risk appetite.
  • F. Independent Verification

  • Further to C, above, members disclose post contribution a comprehensive audit report.
  • G. Breaches and Disciplinary Action

  • The provision of Art. G of the CVA CoC applies (see above).


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