Introduction
Switzerland, known as “the heart of Europe”, is home to many international companies and startups. It has the best ratio of patent applications to population in Europe, world-class research institutes and a highly skilled workforce that attracts significant investment from global companies.
Zug stands out as arguably the most outstanding location for business startups among the cantons. Known for its breathtaking scenery, Zug offers a number of advantages that make it an excellent choice for companies looking for a strategic and business-friendly location.
Zug is often referred to as “Crypto Valley” for a reason, as it has proven to be an ideal location for crypto companies over the years due to its favourable regulatory environment, robust infrastructure and supportive ecosystem.
We must not forget the extremely forward-looking Zug government regarding the blockchain industry, which, embedded in Switzerland’s political stability and financial security, has ensured that Crypto Valley Zug has developed into a real magnet for cryptocurrency entrepreneurs and investors.
Zug’s progressive approach to cryptocurrencies has led to the creation of numerous blockchain and crypto-related businesses and fostered a collaborative and innovative environment, giving rise to the likes of Ethereum, which was founded in Zug in 2014.
Incidentally, the first Bitcoin ATM was also installed in Zug, which underlines how crypto achievements are welcomed with open arms here.
In addition to the generally favourable environment, there are also specific institutions with which the government supports the blockchain community.
One of these is the Crypto Valley Association, a government-funded project based in Zug. The Crypto Valley Association provides companies with access to a robust ecosystem of resources, including money, talent and infrastructure.
With companies like Solana, Cardano and other major crypto players based here, Crypto Valley has quickly become one of the world’s leading cryptocurrency technology hubs.
Let’s take a closer look at the five main reasons why Crypto Valley continues to welcome crypto companies and is a thriving location for blockchain and cryptocurrency innovators.
1. Favourable Regulatory Environment
Zug is a prime business address for crypto companies in Switzerland mainly because of the favourable regulatory environment.
The regulatory framework in Switzerland is an example of transparency and efficiency. They offer a streamlined licensing process for virtual asset providers and are an example of a balanced approach that encourages innovation while protecting the interests of consumers.
Unlike many other countries, Switzerland classifies cryptocurrencies as an asset rather than a security and treats the ownership and transfer of virtual currencies like traditional asset classes such as real estate or gold.
The country has no specific tax rules for cryptocurrencies, but they are subject to the established tax legislation described by the Federal Tax Administration (FTA), just like shares, bonds and real estate in Switzerland.
The Swiss Financial Market Supervisory Authority (FINMA) manages all aspects of legislation for virtual currencies and other digital asset services, such as decentralized financial services (DeFi).
It considers cryptocurrency exchanges based in the country to be legal, provided they obtain the necessary operating licenses. Depending on the specifics of the blockchain project, FINMA offers four different types of crypto licenses in cooperation with a Swiss AG or GmbH based in the country.
The Swiss Financial Market Supervisory Authority (FINMA) has consistently stated that it makes no distinction between the different technologies used for the same activity: In other words, the principle of “same business, same rules” applies to any new technology.
FINMA is currently following this idea in the implementation of Swiss financial market laws based on cryptographic blockchain assets and applications.
Due to these regulations and the favourable Swiss tax laws, numerous major cryptocurrency companies such as Ethereum, Solana, and Tezos have established themselves in Switzerland.
Switzerland also has a low corporate tax rate and offers tax breaks for companies conducting R&D (research and development). This could be of great benefit to crypto startups that need to invest heavily in research and technology.
While there is no specific tax law for cryptocurrencies, the favourable tax policy is one of Zug’s most appealing aspects. With one of Switzerland’s lowest corporate tax rates, Zug distinguishes out as an economically viable alternative for company domicile, and this advantageous tax system benefits both large and small businesses, crypto and blockchain companies inclusive.
Another reason why Zug is a prime business address in Switzerland is because it accepts Bitcoin payments. Typical uses include fees for minor government services such as providing a birth certificate, proof of residence, or an identification paper. The City Council decided to do so on May 3, 2016.
All they did was build an electronic wallet and share its address with the public for payment.
“We want to express our openness to these new technologies and gain experience at an early stage of their development”. Dolfi Müller (then Mayor of Zug) said at the start of the pilot. “We are inviting fintech companies in our region to exchange ideas with the City Council. We aim to get a better understanding of their needs for optimal development in our home city and economic area.”
According to Müller, blockchain technology has great potential in transactions as well as e-governance.
This openness between Zug’s city council and blockchain and crypto companies is one of the main reasons why most crypto companies are located there.
2. Strong Infrastructure
Companies are attracted to Zug not only for its tax advantages but also for its political stability, economic resilience and highly skilled workforce. Understanding the appeal of this Swiss canton is crucial for any company considering global expansion.
Zug is the richest canton in Switzerland and has a long tradition of hosting major international companies, especially those that are innovative and leaders in their field.
As a result, Zug is also home to numerous venture capital firms, angel investors and crowdfunding platforms that are not afraid of new technologies. As a result, blockchain companies can find numerous alternatives to raise the necessary funds here.
Switzerland has one of the most advanced infrastructures in the world, with massive rail and road networks connected to the rest of Europe.
Zug is located in the heart of Switzerland, around 27 miles northeast of Lucerne and a little more than 30 miles from Zurich. No place in Switzerland is more than two hours from Zug.
Zug is only 30 minutes away from Zurich Airport, which has international connections.
Switzerland’s technological capabilities and infrastructure provide an ideal starting point for blockchain companies. The Swiss stock exchange, SIX Digital Market, is a pioneer in providing a fully combined trading, settlement and custody service for digital assets.
Zug’s commitment to cutting-edge technology and digital infrastructure helps companies remain competitive in the digital age. Zug’s status as a leading hub for innovation and technology is reinforced by its significant investment in technological breakthroughs and digital connectivity.
Because of this supportive environment, many global companies conducting ground-breaking research and development choose Zug as their headquarters.
3. Supportive Ecosystem
Switzerland’s thriving and integrated support infrastructure benefits the crypto companies based here. It is a fully developed ecosystem enabled by a framework that encourages innovation and the legal certainty provided by the state.
Early pioneers such as the Ethereum Foundation were very influential and attracted many companies to the “Crypto Valley”.
In addition to universities, venture capital firms, and other providers of blockchain solutions, many Swiss law firms now offer professional services in the crypto sector.
There are various organizations working to promote the blockchain industry in Switzerland. These organizations include the Crypto Valley Association (CVA) in Zug, the Ticino Blockchain Technologies Association (TBTA) in Lugano, the Capital Markets and Technology Association (CMTA) and the Global Blockchain Business Council (GBBC) in Geneva, as well as the Swiss Blockchain Federation (SBF) in Bern.
The country also has an active government that promotes innovation and entrepreneurship, as well as a vibrant startup ecosystem.
Even though the banking system is a supportive ecosystem for crypto businesses, Swiss banks are promoting cryptocurrencies by offering robust on- and off-ramps.
4. Talent Pool
Switzerland has a well-educated, professional and international workforce with a strong focus on research, engineering and technology.
Zug’s workforce is highly educated and multilingual, making it an excellent choice for companies seeking top talent. The canton’s focus on education and training guarantees a steady supply of skilled labour.
Companies benefit from the proximity to renowned research universities and a large talent pool. For example, EPFL and ETH Zurich, two federal science and technology institutions in Lausanne and Zurich, are recognized as world leaders in cryptocurrency science (Coinbase, 2019). There is also close cooperation with the Lucerne University of Applied Sciences and Arts in the field of blockchain development.
The University of Zurich founded a Blockchain Center in 2017. The center is run by more than 20 scientists who conduct blockchain research. CoinDesk selected the Blockchain Center as one of the best crypto universities for 2021.
A total of 20 universities in the language regions of Switzerland offer courses in blockchain and technology. This leads to a continuous influx of workers with blockchain know-how.
5. Quality of Life
Switzerland is known for its high standard of living, which is reflected in its first-class infrastructure, security, healthcare, education and work-life balance.
The country is home to three of the ten cities with the highest quality of life in the world, making it an excellent place to live and work. The Swiss also have a high life expectancy and one of the best work-life balances in the world.
Zug’s high standard of living attracts many talented people. The city is known for its cleanliness and picturesque surroundings, which include the beautiful Lake Zug and the surrounding mountains.
Zug is Switzerland’s safest region, with the lowest crime rate per 1,000 residents among all Swiss cities and regions. Zug has the most advanced and convenient transportation and infrastructure system in Switzerland.
Zug also houses some of the most diverse and stable international schools, healthcare facilities, and political and cultural systems.
Over the last two decades, Zug has been regarded as the most appealing location for international professionals due to the social security system’s safety, infrastructure, and service quality.
As a cosmopolitan city, Zug attracts foreign talent, resulting in a vibrant and diverse community. Zug is the principal city of its county and quite a popular tourist attraction, featuring some of the finest examples of stunning old architecture and wonderful views of the nearby.
English has established itself as an unofficial fifth language alongside the country’s four official languages, adding to its global appeal. These qualities contribute to a high standard of living that attracts businesses, professionals and families.
Zug has a number of respected foreign language educational institutions that offer top-notch education, which makes it easy for families to relocate to Zug and send their children to one of these foreign language schools.
Zug is a desirable city to live and work in due to its excellent healthcare, first-class international schools and numerous recreational opportunities such as hiking, skiing and cultural events. This high standard of living helps businesses attract and keep skilled personnel who value a healthy lifestyle.
Case Studies of Crypto Companies in Zug Switzerland
Polkadot
Zug-based Polkadot is the blockspace ecosystem that enables limitless creativity. It enables Web3’s most prominent inventors to bring their ideas to market quickly with customizable fees and the industry’s most versatile token opportunities.
Polkadot provides purpose-built blockspace across a network of specialized blockchains while being secure, composable, versatile, efficient and cost-effective.
Polkadot creates real value for end users, developers and businesses across all industries, driving wider and more sustainable adoption of Web3.
Polkadot was founded as the most realistic approach to realizing the Web3 vision, with support and transparent governance from a diverse, global and decentralized community. Polkadot is driving the campaign for a better online and paving the way for an equal future for all.
Avem
Avem is an EVM Institutional Blockchain (Layer 1) that supports transactions with CBDCs, security tokens and NFTs. Avem is a legitimate way for institutions to enter the blockchain industry. The foundation is based in Crypto Valley, Switzerland.
The Avem technology is based on the Ethereum Virtual Machine (EVM), with access via MetaMask and MetaMask Institutional. The user experience is designed to be as intuitive as possible. CBDCs on the blockchain will be available for trading.
One of their recent achievements is conducting workshops with the BIS (Bank for International Settlements) (central bank of central banks) to create tokenized bonds for countries that can be traded as security tokens on Avem.
Conclusion
The advantages of setting up a company in Zug go far beyond the impressive landscape.
The low tax rates, political stability, access to international talent and solid legal protection make Zug a perfect location for entrepreneurs and companies seeking a stable and business-friendly climate for their crypto businesses.
The infrastructure, strategic location and support for research and development continue to attract various companies and cement Zug’s status as the best Swiss location for crypto companies.
All of this combined makes it clear why Switzerland is so important to the crypto ecosystem in 2024, and we’re excited to see what else Switzerland has in store for cryptocurrencies in the near future!
