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Switzerland’s crypto valley is the stretch of land located between Zurich and Zug. The area is Switzerland’s version of Silicon Valley from the US. The country is home to one of the most decentralized governments, making it a prime attraction for those looking to operate in such a system. Besides Switzerland, other parts of the world that are keen to a decentralized system are Malta, Silicon Valley, New York, Gibraltar and Singapore. Seeing Zug for the first time, one may not expect that such a place is looked upon as something similar to Silicon Valley.
The Term “Crypto Valley”
The term of the crypto valley was formed back in 2014 when the founder of blockchain platform Monetas, Johann Gevers, laid the groundwork for creating a global hub for firms that will deal with blockchain. The official term was coined by ethereum co-founder Mihai Alisie.
Switzerland’s political system provides great power to its citizens, who can challenge a current law and propose a change. This ability given to the people is what led to the legalization of online platforms such as the online casino Starvegas in the country. Also, this “direct democracy” is also what led to the area of Zug becoming a major crypto hub and embracing blockchain technology, as well as developing businesses that revolve around this technology.
What Has Led to Its Development?
Each of the 26 regions in the country holds a great level of control over their laws. What greatly contributed Zug to becoming Switzerland’s crypto valley was the progressive and supportive political system alongside the attractive location for foreign investors. Blockchain-based projects can take great advantage of secure legislation with low taxation and business-friendly regulations also being something to consider.
Much of Switzerland’s economic development has been made possible through the country’s intellectual potential alongside education and intensive research and development programs. Many ask the question if Switzerland’s Crypto Valley will overtake the USA’s Silicon Valley. In the last few years, many companies based in Silicon Valley have faced a large amount of pressure from authorities worldwide because of reasons for those large tech companies becoming too big and they are expected to review their processes to remain compliant with local markets.
A Direct Comparison Cannot be Done Yet
Countries around the world are on the backs of California’s giant tech companies and are expecting them to provide better security and privacy policies as well as having a lower impact on the environment.
With the Crypto Valley in Switzerland, everything is still young and the companies that are already there are still in their infancy with their sole focus being on developing new technologies that involve blockchain and cryptocurrency products.
At the moment, comparing the two tech valleys is not fair, as one of them has been around for quite some time while the other one is still finding its footing. However, what can be compared is analyzing the philosophy that the companies located in each of the valleys operate by. In October of 2018, a public-private partnership for strengthening blockchain was created known as the Swiss Blockchain Federation.
On the way in the Crypto Valley
Accidentally stopped passers-by at Zug train station are a little embarrassed, as they have never visited the Crypto Valley themselves.
No signpost helps with the search, the only thing that can be found is the possibility to buy BTC at the ticket machine of the SBB (Swiss Federal Railways). If it’s not a place, then what is it? And what does it mean for the actors? The answers are obvious, or better: in a good cup of coffee. Various interlocutors from administration, teaching and legal services talk about their definition of Crypto Valley, its origin and importance.
“A Focused Ecosystem”
For Alberto Diaz (Deputy Head of the Economic Contact Point of the Canton of Zug and responsible for the blockchain cluster), the Crypto Valley is a “focused ecosystem that focuses on blockchain technologies”. Once a pioneer, Alberto Diaz now sees Crypto Valley as “one of the world’s leading, densest clusters of blockchain and crypto companies”. It all began in 2014/15 when a delegation of around 20 well-known exponents, including representatives of the ETH Foundation, visited Zug. After careful evaluation of the location, the foundation settled in Zug. The ETH protocol was then written here. The foundation initially formed a small community, but the location had gained attention.
Other use cases, layers and protocols emerged in this rapidly growing ecosystem. The decisive success factors for the settlement were the proximity and openness of the municipal and cantonal administration, legal certainty, a democratic form of government and the overall business-friendly environment. Authorities played together and saw themselves as enablers. The commercial register, the tax office, the city administration – everyone pulled together. Nevertheless, it is not only the credit of the city or the canton of Zug, where the distances are short and, according to Alberto Diaz, a “little thing” makes working together and approaching each other so easy.
And Diego Benz (partner, lawyer and notary I Kaiser Odermatt & Partner AG) agrees with this opinion. Without the openness of the entire government and its apparatuses, such as FINMA (Swiss Financial Market Authority), this “success story” as described by Prof. Dr. Tim Weingärtner (Lucerne University of Applied Sciences, HSLU) mentions not having been able to write. Diego Benz adds that it is the exchange at eye level that allows business activities to flourish. That also proves it Project Drakkensberg which he fondly remembers.
This is how Prof. Dr. Tim Weingärtner emphasizes the importance of this exchange while at the same time creating a platform that promotes and challenges it at heart. According to Weingärtner, the very interdisciplinary industry benefits in particular from the fact that it can find everything it needs: legal, business developers, IT specialists. A resulting ecosystem grows through trust, which is built up through ethical behavior. But Crypto Valley is also a strong brand, and all participants should be aware of its responsibility. The role of the HSLU lies in training and further education with offers specifically tailored to the needs of the industry. In a nutshell: For Prof. Dr. Tim Weingartner “Community”. As far as the aforementioned “brand” is concerned, care was taken during its creation. “Zug” is deliberately not part of his name.
Zug as the center of the crypto stronghold
Back to the city of Zug. Genuine interest is often difficult to recognize. Not so on the train. From the beginning she was innovative and some groundbreaking projects were implemented. Since July 1st, 2016, city fees of up to CHF 200 can be paid at the counter of the resident control pay with bitcoins. Just over a year later, on November 15, 2017, the residents of the city of Zug had the digital identity available, which is based on an app and is operated via the ETH blockchain.
And what do users do with it? Of course, vote. The direct democracy of Switzerland requires the participation of its citizens, voting processes are simply part of it. Since June 25, 2018, voters in the city of Zug have been able to do this via a blockchain-based E-Voting System do it – with your digital ID. Despite all the innovations, the city of Zug’s most recent coup leans heavily on tradition. Zug cultivates a cherry culture, which has been proven for 600 years. This includes a comprehensive tradition, which, in addition to the “Chriesimärt”, also includes the “Chrissisturm” and of course cultivates the cherry and cherry cake culture. So what could be more obvious than an NFT collection consisting of 500 unique “Crypro Cherries“?
Beyond the city limits, taxpayers can Canton of Zug have also been paying their taxes with BTC since 2021.
The recently published and from the CVVC AG published ”Swiss Digital Asset and Wealth Management Report 2021” shows very clearly how the Crypto Valley – across Switzerland – was able to develop into what it is today:
Born in Zug, the Crypto Valley continues to grow rapidly, beyond the canton borders to Zurich, Lugano and not to forget Liechtenstein, where on January 1st, 2020 the TVTG (“Blockchain Law”) came into force as one of the most comprehensive laws in the field of DLT/Blockchain but the Crypto Valley is no longer just a train. For everyone we are talking to, today it is all of Switzerland and Liechtenstein, i.e. two countries and four languages.
The future prospects of the region
And the flip side of the coin? Of course, looking back, there are always ways to improve something, everyone agrees on that. If opportunities are seized, it also calls into play players who are not pursuing ethical intentions. These cases are well known. And instead of criticism, Alberto Diaz names challenges that the ecosystem is currently struggling with. This shows that the “small size” mentioned also has disadvantages in addition to the many advantages: skilled workers are urgently needed, the demand can hardly be met despite excellent training opportunities (HSLU, ETH, University of Zurich and many more), migration processes can be cumbersome You often look in vain for affordable living space.
And the future? How is the Crypto Valley staying on top? Exchange! Roundtables are held to pick up the needs and pain points of all local companies. An exciting finding of these roundtables is that the blockchain companies basically have the same problem as the other companies. In the context of these roundtables, questions about the future are also asked and addressed.
Passion, which was omnipresent in the conversations, will bring this community forward, Diego Benz invites: “It’s the most rocking ecosystem, come and check it out.”