Zug Birthplace of Ethereum and Crypto’s Maturity Hub.

Tiny Zug is a powerful force in all areas of cryptocurrency, according to our Crypto Hubs 2023 rubric. Despite its small population, Zug scored the highest overall for opportunity measures, thanks to the abundance of per-capita crypto-related companies and events. The hub also received the highest ranking in the two most heavily weighted criteria overall: regulatory structure (a “driver” and 35% of total weight) and quality of life (an “enabler” and 15%). Zug did not have any significant weaknesses across the board.

For more information on the criteria and how we weighted them, see: How We Ranked blockchain’s Crypto Hubs 2023: Our Methodology.

The Bitcoin white paper by the mysterious Satoshi Nakamoto is the most iconic origin story in the crypto world. The Ethereum launch in 2015 by a young Vitalik Buterin, who worked feverishly out of a small apartment in Zug, Switzerland, alongside other coders, is the runner-up.

• Cardano (ADA) up 10% in last week, more rallies ahead?
• Sequoia Partner Alfred Lin claims FTX investment was a correct decision.
• Next LUNC price increase prediction based on $0.00009 support level for Terra Luna Classic.

“It was like a shoe box. A family house. People were living there on mattresses, almost like a hostel,” Bernd Lapp, an early member of the Ethereum Foundation’s advisory board, told me a few years ago. He remembers that Buterin was “very kind, very nice” and would shop for groceries, peel carrots and then hand them out to the coders.

The birthplace of Ethereum is one reason why Zug is “literally the crypto cradle,” said Alexander E. Brunner, a former member of Zurich’s parliament and author of the book “Crypto Nation Switzerland.”

Another reason is the Swiss government. “You can deny it or you can face it,” Dolfi Müller, the former mayor of Zug once said of the emergence of cryptocurrency and blockchain technology. “We always said we have to face it, because these things are coming if we want or not.”

Read Crypto Hubs 2023: Where to Live Freely and Work Smart

So Zug faced it, working proactively to brand the region as “Crypto Valley,” their answer to Silicon Valley. For example, the government experimented with allowing citizens to pay their taxes with bitcoin. Then there was the clear regulatory framework. “Switzerland was the first country to have a guideline,” said Brunner.

While regulatory limbo – or what some call “Operation Choke Point 2.0” – has deterred crypto companies from making a home in the United States, in Switzerland, you know precisely what you’re going to get, and they make it easy for you. There are even local “crypto banks” like SEBA and Sygnum, which provide crypto startups with basics like tax statements, coin storage, and deposit insurance, said Brunner. (These are rarer to find elsewhere in the world.)

This crypto-friendly environment is why the Ethereum Foundation, Cardano, Cosmos, and hundreds of other projects came to Zug. Taxes are low, fintech is everywhere, Zurich University has a strong blockchain center, and the Zug government just pledged 39 million Swiss francs (~$43.7 million in USD) towards a blockchain research center.

However, there is one bit of nuance: Zug itself isn’t packed with bars and crypto bros. It’s a small city with a population of less than 30,000, and as Brunner said with surprising bluntness, “It’s boring.” This is why, realistically, the idea of Zug as a crypto “hub” also factors in the larger cities of Zurich (only a 20-minute train ride away) and Bern and Geneva. “It has sort of spread across all of Switzerland,” said Brunner.

Not a dev nation

While Zug might be a convenient place to legally park your company, it’s not always – or even usually – where you pay people to do the actual work. Switzerland is one of the few places on the planet that makes New York City feel cheap. “A lot of the developer talent doesn’t live in Switzerland,” said Brunner. “If you’re looking for the developer or coding community, Switzerland is not the place to be.”

However, Zug is a great place for regulatory clarity, easy access to banks and VCs, or just a relaxing dose of Swiss tranquility. Zug is almost cartoonishly pleasant. I spent a month in Zug in 2019, taking jogs by the lake and basking in the clean serenity. I went to a crypto meet-up in the CV Labs, billed as “the heartbeat of Crypto Valley,” a gleaming, five-story co-working space – focused on Web3, of course – that had, on its top level, floor-to-ceiling windows with imperial views of the Swiss alps.

Recently, the atmosphere at these meet-ups has changed. Hoodies are no longer in fashion, and suits are now the norm. When Brunner attended crypto meet-ups a few years ago, people used to say things like “Bitcoin is going to destroy the banks! We’ll create a better financial system!”

Nowadays, you rarely hear that kind of talk at Zug crypto meet-ups. Instead, there’s a newfound respect for regulatory compliance, licenses, and even partnerships with banks. “The more extreme side of crypto has moved away,” says Brunner. While some may be disappointed by the loss of crypto’s wilder side, Brunner sees it as a sign that “Crypto is growing up in Switzerland.”

Edited by Jeanhee Kim and Daniel Kuhn.