Blockchain Firms Flock To Switzerland’s ‘Crypto Valley’
Zug is a small town near Zürich with only about 30,000 residents, yet it is impacting the FinTech world in a big way. The town, whose economy was once focused on heavy industry and agriculture, is now home to a myriad of companies in the crypto space. As a result, the area is dubbed “Crypto Valley,” and it has an international flair.
“[Zug] has long been home to citizens from around the world, with over 30 percent of its population being foreign nationals,” Oliver Bussmann, who is the founder of Bussmann Advisory AG and president of the Crypto Valley Association (CVA), told PYMNTS in an email interview. He cited “Zug’s high quality of life, openness, pro-business mindset and favorable tax structure” as factors that make the city attractive to people from around the world.
Organizations such as CVA endeavor to welcome crypto firms by “creating a soft landing ground for blockchain companies in Zug,” Bussmann said. (The group seeks to connect segments of the crypto ecosystem from startups, investors, tech companies, academia, legal firms, legislators and established enterprises.) And, as a whole, the country has a healthy tech culture: The Swiss blockchain startup ecosystem has more than 430 startups with labs, incubators and accelerators, according to Bussmann.
One such company in the Zug region is crypto loyalty firm qiibee. The firm offers crypto-based rewards systems, so merchants can offer consumers branded tokens instead of cash back in dollars or points. In essence, the company’s programs give merchants a chance to offer tokenized points – and they come with some advantages. For one, consumers may not feel as easily devalued or shortchanged by merchants when their rewards are not given in fiat currency. Secondly, through programs like qiibee, businesses can trade points with other merchants and provide their customers with more reasons to earn their tokens.
When it comes to his company’s home, qiibee co-founder Gianluca Giancola sees several advantages to setting up shop in Zug. In an email interview with PYMNTS, he said that Zug has a “forward-thinking government, strong participation from regulatory bodies, a first-class FinTech ecosystem, as well as Switzerland’s tax-friendly reputation.” Giancola also said that the area has many highly skilled workers and a business-friendly environment. And he noted that “as an early adopter of bitcoin, the Crypto Valley has demonstrated its commitment to the digital transformation of the city.”
The tech-friendly ethos has also become a part of civic life, with the city even recently trialing a blockchain-based voting system. Through the experiment, citizens voted via smartphone for an “invented issue.” And, while the turnaround was reportedly not all that high, participants found that the process was simple.
But, while the region is conducive to technology and business, it does come with a high cost of living. Housing in the city is not inexpensive, and a two-bedroom apartment can run around $3,000 CHF (about the equivalent number of U.S. dollars). Yet Zug does reportedly have one of the lowest tax rates in Switzerland. Even so, Orion Vault CEO Joanna Pawluk wrote in Entrepreneur that Zug has its advantages over larger centers such as New York or London.
“In a closer-knit community, once you learn who’s who and how the processes and regulation works, you can act quicker,” Pawluk wrote. “There are also fewer places to hide, so while certain services are more expensive at face value, I feel you have more certainty about quality and value.”