Top 4 reasons why Zug, Switzerland has become the global leader in crypto innovation: A deep dive into the Crypto Valley.

In 2023, CoinDesk again placed Zug in first place in its global Crypto Hubs 2023 rankings, followed by Singapore, London, Seoul, Dubai and Abu Dhabi. Criteria include a beneficial regulatory and tax structure, access to industry-specific talent and a high quality of life. Here is the top 4 list of why you should consider opening your company in the Swiss canton of Zug, which has earned its reputation as “Crypto Valley”, if you are working in crypto.

Taxes in Zug – the globally renowned Crypto Valley 

The canton of Zug, nestled in the heart of Switzerland, has gained international recognition for its favourable tax environment, making it an attractive destination for businesses and individuals alike. Zug has a corporate tax rate of only 11.85% (and falling) and, as such, offers the most attractive corporate tax rate in the country. It is followed by the cantons Nidwalden (11.97%) and Lucerne (12.2%), according to a study published in March 2023 by consulting firm PwC. These low tax rates offer a competitive edge that has drawn numerous multinational corporations like Glencore or Johnson & Johnson to establish their headquarters or regional offices in Zug.

As many crypto founders raise millions of dollars to build their blockchain applications, they generally want to use their funds for operative expenses as opposed to paying high taxes as they would in countries like Germany or France. 

Zug not only offers highly attractive corporate tax rates but also some of the lowest income and capital gains tax rates in all of Europe. Unless you are a professional trader, any crypto capital gains are tax free. Income tax for the highest earning income bracket lies at a mere 22.06%, followed by Obwalden (23.3%) and Schwyz (24.98%).

As such, many of the largest crypto organizations including Ethereum, Polkadot, BitMex and Tezos have their domicile in Zug for many years already, helping to shape the canton as the Crypto Valley internationally.

Regulatory flexibility enabling innovation in the Crypto Valley Zug

In many jurisdictions around the world, launching a crypto project comes with significant legal risks for the founders. For instance, almost every single token sale excludes citizens and residents of the USA from participating in it due to the regulatory uncertainty from the SEC. In China, running a crypto company is illegal. So where do founders turn when deciding the domicile of their company?

Switzerland, particularly the canton of Zug, stands as an unparalleled haven for crypto founders seeking an ideal regulatory landscape. Known as "Crypto Valley", Zug has emerged as a global leader in fostering blockchain and cryptocurrency innovation. Unlike other regulators, the Swiss Financial Market Supervisory Authority (FINMA) has established clear guidelines, ensuring compliance without stifling innovation.

A disproportionately large number of global crypto companies have their domicile in Zug, Switzerland, one of the smallest cantons with 130,000 inhabitants between the Swiss Alps. Few places in the world, let alone the rest of Europe, allow crypto founders to raise capital and build blockchain applications with such regulatory clarity and flexibility to work together with the government to foster innovation.

Access to blockchain experts and talent in the Crypto Valley

Due to the high concentration of professionals working in the crypto industry in Zug, founders can easily identify and hire talent from the industry with significant years of experience which can be very difficult to find in other cities.

The lawyers that structured the ICO for Ethereum in 2015 are still operating in Zug, advising global clients to launch their crypto projects from the regulatorily friendly Crypto Valley. Even service providers such as banks or office rentals for crypto companies like the Office Group Zug (LINK) allow payments in Ethereum or stablecoins like USDC or USDT.

There is no higher density of crypto friendly banks in the world as in Zug. Explaining crypto transactions and custody can be troublesome to explain to regular bank employees, who have no idea how the blockchain works. Easy access to banks that can safely trade and custody crypto assets is one of the most important aspects of running a crypto business. The most prominent crypto banks in Zug are Sygnum Bank, SEBA and Maerki Baumann. However, even the Zuger KantonalBank has established itself as crypto-friendly over the past 15 years.

Quality of life in the Crypto Valley canton of Zug

Located near a picturesque lake and surrounded by the Swiss Alps, Zug is both located in breathtaking nature as well as close to global metropoles such as Zurich and Lucerne, which are both less than half an hour away by car or train. The airport of Zurich is one of the most efficient airports in the world and with Swiss airlines you can reach the majority of global destinations with a direct flight and good service.

Swiss cities regularly rank amongst the top 10 cities with the highest quality of life such as Geneva (5) and Zurich (6) in the Business Insider Quality of Life Ranking 2023. (https://www.businessinsider.com/where-are-the-best-most-livable-cities-in-the-world-2023-6?r=US&IR=T#6-zurich-6). Switzerland is one of a handful of countries that is incredibly clean, very safe and business friendly allowing people of all walks of life to set up a sustainable future.