Zug is tiny but mighty in terms of its performance on all criteria under our Crypto Hubs rubric 2023. Zug’s small population helped it score highest for overall opportunity measures, thanks to its richness in crypto-related events and companies per capita. The hub was also ranked highest in two of the most heavily weighted criteria, which were regulatory structure (as a “driver”, with 35% total weight) and quality life (as an “enabler”, with 15%). Overall, Zug did not have any obvious weaknesses.

To learn more about the criteria we used and how they were weighted, please visit: Our Methodology for Ranking CoinDesk’s Crypto Hubs in 2023.

(Ian Suarez/CoinDesk)

The Bitcoin whitepaper by Satoshi is the most iconic story of crypto’s origin. What is the runner-up in this race? The Ethereum launch of 2015 by Vitalik Buterin. Vitalik worked feverishly in a small apartment, in Zug, Switzerland with other coders.

“It looked like a shoebox. It was a family home. Bernd Lapp told me about a few decades ago that people were sleeping on mattresses in the house, “almost like a hostel.” Bernd was an early member of Ethereum Foundation’s advisory council. He recalls Buterin as “very nice, very kind” and that he would go shopping for groceries and peel carrots, and then give them to the coders.

Zug, according to Alexander E. Brunner (author of “Crypto Nation Switzerland” and former Zurich member of parliament), is “literally a crypto-cradle” because it is the birthplace of Ethereum.

The Swiss government is another reason. Dolfi Müller, the former Mayor of Zug once said about the rise of cryptocurrency and Blockchain technology. “We have always said that we must face the facts, as these technologies are here whether we like it or not.”

Zug reacted by proactively branding the region “Crypto Valley”, their answer to Silicon Valley. The government, for example, experimented by allowing citizens pay their taxes using bitcoin. There was also a clear regulatory framework. Brunner said that Switzerland was the first nation to issue a guideline.

While regulatory limbo – or what some refer to as “Operation Choke Point 2” – has discouraged crypto companies from settling in the United States; in Switzerland, you can be sure of what you will get and it is made easy for you. Brunner said that there are local “cryptobanks” such as SEBA and Sygnum which offer cryptostart-ups basic services like tax statements and coin storage, and deposit insurance. It is rare to find in other parts of the world.

The crypto-friendly environment in Zug is the reason why Ethereum Foundation, Cardano and Cosmos, among hundreds of other projects, chose to settle there. Fintech is everywhere, taxes are low and there’s a strong Blockchain Center at Zurich University . The Zug government just committed 39 million Swiss Francs to a blockchain research centre.

There is one nuance, however: Zug is a small town and doesn’t have a lot of bars or crypto bros. It has a population of less than 30,000 people and, as Brunner put it with surprising candor, “it’s boring.” That is why the idea that Zug is a crypto-hub also takes into account the larger cities like Zurich, which is only a 20 minute train ride away, and Bern and Geneva. Brunner said that the crypto-currency has spread to all of Switzerland.

Not a dev nation

Zug is a great place to park your business legally, but it’s not where you hire people to actually do the work. Switzerland is one place on earth that can make New York City seem cheap. Brunner said that “a lot of the developer talent does not live in Switzerland.” If you are looking for the developer community or the coding community in Switzerland, this is not the right place.

It is also the perfect place if you are looking for regulatory clarity, access to banks, VCs, or just a dose of Swiss tranquility. Zug is almost comically pleasant. I spent a whole month in Zug, basking in the serenity and taking long jogs along the lake. I attended a Crypto Valley meet-up at the CV labs. Billed as the “heartbeat of Crypto Valley”, this five-story, gleaming coworking space, focused on Web3, had floor-to ceiling windows on the top level with views of the Swiss mountains.

The atmosphere of these gatherings has changed. Hoodies are gone, and suits are now in. Brunner recalls that when he attended crypto meetups in the past, people said things like “Bitcoin will kill the banks!” We’re creating a better financial systems!”

This is a phrase you rarely hear anymore at crypto meetups in Zug. There’s now a renewed appreciation for licensing, regulatory compliance and even partnerships with banks. Brunner said that “the more fringe aspect of crypto has moved away.” Brunner believes that crypto is “growing up” in Switzerland, despite the fact that some might be upset by the loss of its wilder side.

Jeanhee Kim & Daniel Kuhn edited the book.