Recently, CoinIdol.com reached out to professionals in Switzerland to find out why Zug, in Switzerland is becoming a popular location for crypto-related businesses. Zug, Switzerland, aka Crypto-valley, can be compared to Silicon Valley, California.
Silicon Valley is home to many technological startups and the area gets its name from the silicon used in computer chips. Similarly, Crypto-valley is home to many crypto-related companies and gets its name from the type of businesses it attracts to the area: crypto.
To find out why companies have been migrating to Zug, as opposed to other parts of the world to run their business, we asked head of business development at Monax (formerly Eris Industries), founder and organizer of blockchain meetup Berlin, Co-Founder/Co-Host of Epicenter, and Switzerland resident, Brian Crain, what makes Zug so appealing to crypto companies.
“Mostly tax reasons. A lot of these startups are there because they do crowd sales and the Swiss authorities there have been very open to that. Ethereum was the first one that did that and they managed to get an okay from the legal perspective and they didn’t have to pay taxes on the money earned. Many businesses later followed to more or less follow that approach.”
When we asked Lead Project Manager at Dash, Robert Wiecko, what brings crypto-related businesses to Zug he said, “I believe that Switzerland is becoming the so-called crypto-valley mainly because of the low taxes, The Swiss have a tradition of privacy, a stable economy, and politics in their country. All of these factors are very important and attractive for any type of business, but for small startups (usually with low budgets) in a very young industry, like the crypto-industry, this might be a critical success factor. Low tax burden and lack of restrictive regulations support development and creativity. Funds which would have to be spent on taxes or licenses can be simply redirected to R&D. The fact that cryptocurrencies are considered foreign currencies in Switzerland, makes all procedures and operations much easier - companies from the cryptocurrency industry should only follow existing legal and tax regulations - this gives a lot of comfort and supports transparency. Switzerland being a stable, safe, and supportive environment for emerging technologies and creative startups looks like a perfect place for crypto-valley. This is also a great promotion of the country as an innovative and business-friendly place. The benefits are mutual.”
Mutually for the swiss economy...you would think that the local Bitcoin economy would be booming because of crypto-valley, but that doesn’t seem to be the case. Beginning on July 1st, 2016, The Swiss municipality launched a program that allows citizens to pay for public services with cryptocurrency. The government will accept payments of up to 200 francs in bitcoin for government services. However, besides the government accepting bitcoin for public services, Bitcoin is rarely accepted elsewhere. Even the government’s acceptance of Bitcoin in Zug is merely a year-long pilot project. Who knows if the government will continue to accept bitcoin once the trial is over.
When we asked Crain if local businesses and cities around Zug are accepting bitcoin he said:
“[I’m] Not really sure as I haven’t spent much time there. AFAIK the local government there accepts bitcoin for some stuff. But in general, I’m sure it’s like everywhere else in that few people actually use bitcoin.
A quick internet search revealed that it is like everywhere else; the crypto-accepting businesses in the surrounding area are few in number. Although Crypto-valley is the mecca for crypto-business owners, crypto-consumers still don’t have a safe haven of their own. Sometimes we question why a majority of the world does not feel comfortable using bitcoin, but we must remember, people feel comfortable using businesses, currencies, and services that are ubiquitous. Take McDonald's for example, the franchise has chains everywhere, and even though the food is garbage, people feel comfortable eating there because they know it is reliable.When customers see the McDonald’s logo they know the service that will come with it. Right now, when citizens look at Bitcoin, they do not recognize the logo or know what kind of service comes with it, therefore many of them do not know if it is reliable.