Zug is a Swiss city that is famous for numerous cryptocurrency ventures and IT startups placed in it. It is sometimes referred to as Crypto Valley - the name that references Silicon Valley and was first mentioned by Mihai Alisie - the Ethereum project co-founder.
Zug is a city located in the middle of Switzerland. It is relatively small city with a population of around 30 thousand people. The exact date of the foundation of Zug remains unknown, but is estimated to happen around 600 AD. The city is a capital of the Zug canton and its biggest city. Its official language is German, mostly spoken in its local variant - Alemannic Swiss German. For most of its existence, Zug was a poor agricultural land but it rapidly changed in the 20th century. The city gradually became more and more industrialized and in the second half it already it was on of the most economically stable territories in Switzerland.
The city is a tax haven, meaning it has very low taxes for foreigners and their ventures. The effective tax policy of Zug made it an attractive place to be registered in for multiple international companies. Some of the companies that placed their headquarters in Zug are:
- The Transocean Ltd. offshore drilling contractor
- The Xstrata plc. mining company
- The Nord Stream AG consortium that was established to control and maintain the construction and operation of the Nord Stream pipeline
- Siemens Building Technologies
Zug as the Crypto Valley
Besides attracting multiple international ventures, Zug turned out to be very friendly place for cryptocurrency ventures. It happened not only due to the effective tax policy, but also because of technological advance of the city.
Zug was one of the first cities that began to accept digital currency, including Bitcoin, as a payment to cover city fees. Bitcoin is accepted as a means of paying small amounts of fees, up to 200 Swiss Francs (Sfr.), which is automatically converted to Sfr.. The decision to take Bitcoin as a mean of payment was taken strategically to gain the attention of multiple blockchain-focused ventures.
The city offers the ventures located in it to act in its advanced business atmosphere. The government of the city is very open for negotiations that helps to make it comfortable for new companies to operate in the city. In addition, the long history of banking business in Switzerland provided the country with one of the best financial confidentiality policies.
As a Crypto Valley, Zug managed to gather some of the most prominent cryptocurrency companies. Some of them are:
To ensure the healthy and effective cryptocurrency business processes, Crypto Valley Association was established. Crypto Valley Association is government-supported, but independent entity that acts as on behalf of the cryptocurrency ventures of Zug. It helps to connect the Zug’s government with Zug’s cryptocurrency ventures and includes more than a thousand members - start-ups, associations, investors, educators and so on.
Crypto Valley Association is a holder of crypto valley conference - one of the largest and most prominent events in blockchain industry. Every year, crypto valley conference gatherers blockchain developers, investors, scientists and state representatives.
Cryptocurrencies (mostly referred to as virtual currencies by the Swiss government) are considered to be digital assets Both in Switzerland and in Zug particularly. It means that cryptocurrencies are not a legal tender but can act as money in the exchange processes. Due to this fact, cryptocurrency is not covered by the laws aimed to regulate securities, financial and investment contracts and so on. This fact makes cryptocurrency development much easier, as well as making it more comfortable to use and exchange for the ordinary cryptocurrency users.
Swiss cryptocurrency exchanges are covered by the anti-money laundering (AML) and know your customer' (KYC) policies of the country. It means, generally, that its users should be registered, identified and authenticated to use the exchanges. The exchanges themself are required to either be a member of self-regulated organization or get a Swiss Financial Market Supervisory Authority (FINMA)-issued license to operate.
Depending on the activity of particular blockchain venture, different rules are applied. For example, if a company is acting like a bank (commercially stores the client’s assets or manages the assets to gain profit) it should have a banking license.
- Crypto Valley Associations statistics
- Library of congress - Regulation of Cryptocurrency: Switzerland
- Chris Osborne - 20 Crypto Companies in Zug You Should Get to Know
- Wikipedia: Zug