Crypto Valley — a part of the book Zug: The Making of a Global Hub by Dr Alexander Ressos.
The fourth pillar of the Zug business location is the youngest. Within little more than a decade, the canton became the centre of the Swiss industry in crypto-assets and Digital Assets, and the name "Crypto Valley" entered the vocabulary of the global technology scene. The story begins with a handful of Bitcoin enthusiasts and a foundation created in 2014 to develop a new blockchain protocol before it continues through the boom of initial coin offerings in 2017, the arrival of regulation from 2018 and the maturing of an ecosystem that, according to its own count, comprised 719 companies in the canton in 2025. Part G tells this story, beginning in Chapter I, which follows the birth of Crypto Valley from 2013 to 2018. Chapter II describes the maturing of the ecosystem, the arrival of the banks and the attitude of the public authorities from 2018 to 2026. Chapter III examines the foundation model, which made Zug the preferred seat of blockchain projects, together with the legal questions that it raised. Part H then sets out the financial market regulation that governs crypto-assets and Digital Assets in Switzerland.
This part belongs to Zug: The Making of a Global Hub by Dr Alexander Ressos, published here in full, section by section.
The Birth of Crypto Valley (2013–2018) — conclusion
Crypto Valley was born between 2013 and 2018, beginning with the foundation of Bitcoin Suisse in 2013 and of the Ethereum Foundation in 2014. Read more Zug · Crypto ValleyWhy a small canton became a crypto hub
The rise of Zug as a centre of blockchain technology has several explanations that reinforce each other. Read more Zug · Crypto ValleyThe first actors
The first companies of the Swiss crypto industry were small firms founded by early users of Bitcoin, who saw in the technology an opportunity for new financial services. Read more Zug · Crypto ValleyThe Ethereum Foundation
The decisive event in the early history of Crypto Valley was the establishment of the foundation that developed the Ethereum protocol. Read more Zug · Crypto ValleyThe town accepts Bitcoin
On 1 July 2016, the town of Zug began to accept Bitcoin for the payment of fees at its residents' registration office, up to an amount of 200 francs. Read more Zug · Crypto ValleyThe Crypto Valley Association
On 1 March 2017, the Crypto Valley Association was founded in Zug as a non-profit association to support the development of blockchain technology and the growth of the businesses that use it. Read more Zug · Crypto ValleyThe ICO boom of 2017
In 2017, the market for crypto-assets experienced a speculative boom. The price of Bitcoin rose from about 1,000 dollars at the beginning of the year to nearly 20,000 dollars in December. Read more Zug · Crypto ValleyThe end of the boom
The ICO boom ended in 2018, when the prices of crypto-assets fell sharply from their peak in December 2017 and many of the projects that had raised money in the boom failed to deliver the products… Read more Zug · Crypto ValleyA Geneva comparison: finance and technology
The Geneva volume describes a financial centre whose strength lies in private banking, commodity trading and the international organisations. Read more Zug · Crypto ValleyThe legal environment of the early years
Entrepreneurs who came to Zug in 2014 and 2015 found no law that dealt with crypto-assets and Digital Assets, an absence that was itself an attraction. Read more Zug · Crypto ValleyThe service providers arrive
A cluster needs more than founders. From 2015, lawyers, auditors, tax advisers and fiduciaries in Zug began to take on crypto clients. Read more Zug · Crypto ValleyWho came to the valley
The early population of Crypto Valley was international and young. Founders came from Germany, Austria, Canada, the United States, Russia, Ukraine, Israel, China and Singapore. Read more Zug · Crypto ValleyThe commodity traders and the blockchain
The encounter between the old Zug economy and the new one was limited. The commodity traders examined the use of distributed ledgers for trade finance and for the documentation of physical shipments. Read more Zug · Crypto ValleyPractitioner's note: advising a token project in 2017
A lawyer in Zug who advised a token project in 2017 would typically work through a short list of questions. Read more Zug · Crypto ValleyBitcoin Suisse and the brokerage model
Bitcoin Suisse deserves a closer look, because its business model shaped the early ecosystem. Read more Zug · Crypto ValleyConferences, media and the image of the valley
The name "Crypto Valley" was a marketing success. Conferences held in Zug and Zurich from 2017 onwards brought investors, developers and journalists to the canton. Read more Zug · Crypto ValleyThe reputational balance of the early years
The balance of the early years is mixed. On the positive side, Zug became the seat of the Ethereum Foundation, whose protocol became the second-largest crypto network in the world, and of a number of… Read more Zug · Crypto ValleyBlockchain in the cantonal administration
The town's Bitcoin experiment of 2016 was followed by further steps in public administration. Read more Zug · Crypto ValleyThe founders' perspective
Research institutions followed the industry. The Lucerne University of Applied Sciences and Arts opened its campus for computer science in Rotkreuz, in the canton of Zug, in 2019, where it developed… Read more Zug · Crypto ValleyRegulation and Maturity (2018–2026) — conclusion
From 2018, the crypto industry of Zug matured. FINMA's guidelines on initial coin offerings of February 2018 set out how Swiss law applied to tokens by distinguishing payment tokens, utility tokens… Read more Zug · Crypto ValleyFINMA's guidelines on initial coin offerings
On 16 February 2018, at the height of the uncertainty that followed the ICO boom, the Swiss Financial Market Supervisory Authority published guidelines on the treatment of initial coin offerings… Read more Zug · Crypto ValleyThe federal government and the Blockchain Taskforce
The federal government also took up the subject. In January 2018, the Federal Department of Finance set up a working group on blockchain and ICOs. Read more Zug · Crypto ValleyThe crypto banks
The maturing of the industry brought the banks. In August 2019, FINMA granted banking and securities dealer licences to two companies specialised in crypto-assets and Digital Assets: SEBA,… Read more Zug · Crypto ValleyThe canton accepts crypto-assets for taxes
In September 2020, the canton of Zug announced that from 2021 it would accept the payment of taxes in Bitcoin and ether, by both companies and individuals, up to an amount of 100,000 francs per… Read more Zug · Crypto ValleyCrypto winters and the resilience of the valley
The crypto industry is cyclical. After the boom of 2017, prices fell sharply in 2018 and remained low until 2020, a period that the industry calls a crypto winter. Read more Zug · Crypto ValleyThe composition of the ecosystem
The ecosystem of Zug has changed in composition since the early years. The foundations that developed protocols and issued tokens, which dominated the landscape in 2017, have been joined by companies… Read more Zug · Crypto ValleyThe attitude of the authorities
The attitude of the cantonal authorities towards the crypto industry has been consistently supportive, but it has evolved. Read more Zug · Crypto ValleyZug in the international competition
Crypto Valley competes with other crypto hubs around the world: Singapore, Dubai and Abu Dhabi, Hong Kong, London, the Cayman Islands, Liechtenstein, Malta and, in the United States, Miami and New… Read more Zug · Crypto ValleySelf-regulation and industry bodies
The industry organised itself alongside the regulators. The Crypto Valley Association developed codes of conduct and working groups on legal, tax and regulatory questions. Read more Zug · Crypto ValleyAnti-money-laundering practice in Crypto Valley
Money laundering is the central risk that regulators associate with crypto-assets and Digital Assets. Read more Zug · Crypto ValleyTokenisation of real assets
The ICO boom concerned tokens issued by projects to finance their own development. The later phase of the industry turned to the tokenisation of existing assets. Read more Zug · Crypto ValleyThe talent market
The crypto industry of Zug depends on international talent. Developers, cryptographers, product managers, lawyers and compliance officers with experience in the field are scarce everywhere, so that… Read more Zug · Crypto ValleyPractitioner's note: onboarding a crypto company at a Swiss bank
A Swiss bank that onboards a crypto company today works through a set of questions that has become fairly standard. It identifies the beneficial owners and controlling persons in the ordinary way. Read more Zug · Crypto ValleyStablecoins and the Swiss franc
Stablecoins are tokens whose value is tied to a reference asset, usually a currency such as the United States dollar. They have become the main means of payment within the crypto markets. Read more Zug · Crypto ValleyThe Swiss National Bank and wholesale digital money
The Swiss National Bank has taken an interest in the technology without adopting crypto-assets. Read more Zug · Crypto ValleyTax transparency: the crypto reporting framework
A further sign of maturity is the market for exchange-traded products on crypto-assets. Read more Zug · Crypto ValleyThe popular initiative on Bitcoin reserves
The Russian invasion of Ukraine in February 2022 and the sanctions that followed affected the crypto industry as well. Read more Zug · Crypto ValleyThe Foundation Model and Its Legal Questions — conclusion
The foundation became the typical legal form of the crypto projects of Zug because it had no owners and dedicated its assets to a purpose, a structure that matched the self-image of open protocols. Read more Zug · Crypto ValleyWhy the foundation
Among the legal forms that Swiss law offers, the crypto projects of Zug chose the foundation more often than any other. Read more Zug · Crypto ValleyThe Swiss foundation in outline
The foundation is regulated in Articles 80 to 89a of the Swiss Civil Code. A foundation is established by the dedication of assets to a particular purpose, which the founder declares in a public deed… Read more Zug · Crypto ValleyThe supervisor's response
The influx of crypto foundations confronted the federal supervisory authority, which had supervised mainly charitable and family-related foundations with conventional investments, with a new type of… Read more Zug · Crypto ValleyFoundations and financial market law
The foundation form did not remove the project from financial market law, because the regulatory classification of a token depends on its function whatever the legal form of its issuer. Read more Zug · Crypto ValleyThe tax treatment of foundations and token sales
The tax treatment of the foundations was a central question for the projects. A Swiss foundation with a public-benefit purpose can be exempted from profit and capital taxes. Read more Zug · Crypto ValleyThe question of substance
A foundation with its seat in Zug and a board whose majority lived abroad raised the question where the foundation was actually managed. Read more Zug · Crypto ValleyThe decentralised autonomous organisation
The foundations were designed as a transitional structure, since the projects intended to hand over governance to their token holders once the protocol was running. Read more Zug · Crypto ValleyCompetition from other jurisdictions
Zug's foundation model faces competition from several jurisdictions that have created legal forms designed for crypto projects. Read more Zug · Crypto ValleyAccounting for crypto-assets
Geneva, which has its own tradition of foundations, is the seat of many international foundations that pursue humanitarian, scientific and diplomatic purposes, often linked to the international… Read more Zug · Crypto ValleyThe liability of the board
Members of a foundation board owe duties of care and loyalty to the foundation and can be liable for damage that they cause by breaching those duties. Read more Zug · Crypto ValleyGrants and the funding of the ecosystem
Many foundations use their funds mainly for grants, with which the Ethereum Foundation, the Web3 Foundation and others support developers, researchers and projects that build on their protocols. Read more Zug · Crypto ValleyWithholding tax and stamp duty
Two federal taxes deserve particular attention in the structuring of token projects: the withholding tax and the stamp duties. Read more Zug · Crypto ValleyDissolution and relocation of a foundation
A foundation cannot simply be wound up by its board, since it is dissolved by law when its purpose can no longer be achieved. Read more Zug · Crypto ValleyThe Ethereum Foundation as a model
The Ethereum Foundation illustrates how a crypto foundation can develop over a decade. Read more Zug · Crypto ValleyThe association as an alternative wrapper
Some projects in Zug use the association under Articles 60 ff. of the Civil Code, whose features deserve a short comparison with the foundation. Read more Zug · Crypto ValleyThe limited company and the operating entity
Many projects combine several entities: a foundation or an association holds the protocol's treasury and pursues the non-profit purpose, while one or more limited companies develop software, provide… Read more Zug · Crypto ValleyDisputes and the courts
Disputes involving crypto foundations have reached the Swiss courts only occasionally. Read more Zug · Crypto ValleyFoundations and anti-money-laundering compliance
A crypto foundation that receives contributions in crypto-assets, pays grants in crypto-assets or holds them for others may have obligations under the Anti-Money Laundering Act. Read more Zug · Crypto ValleyPractitioner's checklist: structuring a token project in Zug
The following checklist, which does not replace legal advice on the individual case, summarises the questions that a project should address before it establishes an entity in Zug. Read more