Blockchain has long been more than just the technology behind the Bitcoin cryptocurrency. It is regarded as being the very innovation, which could have a decisive impact on a number of different areas of society. Blockchain technology allows digital assets (content) to be transferred in a simple, cost-effective and efficient manner. The management of currencies, insurance policies, contracts or land register entries could be radically simplified.
The City of Zug in the Greater Zurich Area has now established itself as one of the global business locations for emerging Blockchain companies. In line with cryptographic use, the pioneers of Zug’s FinTech scene have dubbed the region ‘Crypto Valley’. The FinTech boom in Crypto Valley started when Bitcoin Suisse, Ethereum and Monetas were established in 2013. Numerous other companies with international profiles such as Consensys, Lykke and Xapo have settled in Zug since then.
Rapid development in the Zug economic region
In January 2017, the Crypto Valley Association (CVA) was set up to seize the momentum and join forces. The CVA represents the internal interests to the outside world and aims to promote development on the basis of good networking of the members. The idea is to create the world’s leading ecosystem for Blockchain and crypto technologies in the Zug business location. The number of CVA members has grown from 35 to over 300 since August 2017. This rapid growth reflects the boom experienced in this sector.
The early stage investment company Lakeside Partners AG is also committed to setting up and extending the start-up ecosystem in Crypto Valley. Among other things, this includes the launch of two funding projects. In 2017, Lakeside Partners AG organized the Blockchain Competition, the start-up competition with the world’s largest prize of USD 100,000 for ideas in the field of InsureTech. Teams and start-ups from around the world are taking part. The Blockchain competition will continue in 2018 with the additional focus areas of banking and energy.
Lakeside Partners AG also came up with a solution to meet the Blockchain start-ups need for co-working space in the heart of Crypto Valley, i.e. in the center of the city of Zug. Together with Blockhaus and the crypto team of legal adviser MME, they launched Crypto Valley Labs. The labs are scheduled to be available from the end of 2017. Around 100 people will be able to work there in the medium term.
Research and education in Crypto Valley
Central Switzerland’s largest educational establishment, the Lucerne University of Applied Sciences and Arts (HSLU) is also making an important contribution towards supporting Crypto Valley. In addition to its program of training and further education courses, the university stages conferences and forums for both a specialist and a wider audience, holding around one hundred lectures on Blockchain and FinTech each year. In collaboration with associations, authorities and established companies, applied research projects, such as the pilot project of the City of Zug, are carried out to create a digital identity for all inhabitants: https://www.hslu.ch/en/lucerne-school-of-information-technology/research/topics/blockchain-und-smart-contracts/
Pioneering role for the Zug business location
The digital transformation not only concerns businesses but is also actively promoted by the government and educational institutions. Around a year ago, the City of Zug decided that fees of up to 200 Swiss francs charged by the residents’ registration office could be paid with Bitcoins as part of a pilot project. This decision generated a great deal of global interest and numerous media reports. To date, 40 transactions have been made using Bitcoins. After the successful pilot project, the city is now going one step further by offering all its residents a digital identity from autumn 2017 onwards. The purpose of this digital ID is to enable residents to use e-voting in the future.
Zug – a role model for success
The Swiss Federal Council has recognized the importance of the FinTech sector for Switzerland’s continued success as a financial center in the future. As a result, it agreed to a modification to the Bank Ordinance as of August 1, 2017. The modification allows FinTech companies up to a certain size to develop and test out their business models without becoming immediately subject to the regulations of the financial sector. As the Minister for Economic Affairs Johann Schneider-Ammann wanted to know more about Crypto Valley and to talk to specialists, he traveled to Zug in August 2017. In view of the complexity of the issue, Schneider-Ammann admitted that there was a backlog at the federal level. The expertise and knowledge was not at the level of that in Zug. He went on to say that they were keen to amend the situation quickly and to listen to the requirements of the many innovative companies.
The international focus of the City of Zug, its concentrated know-how, and its pragmatic and solution-oriented authorities make it possible for the city to adopt a pioneering role in the long term – stay ahead with the City of Zug.
Picture credit (City of Zug): Andreas Busslinger
About the author
Beat Bachmann is the key contact partner for companies interested in setting up business in the Canton of Zug. As the head of what is, in effect, a «one-stop-shop», he makes every effort to help companies and their staff feel at home in Zug in the shortest possible time. He facilitates introductions to important contact persons in both the private and public sectors, and cultivates close ties with the local economy. Beat Bachmann holds a Master of Arts in Finance from the University of St. Gallen HSG. Before leading the Zug Economic Promotion office, he worked in management positions in national and international companies and markets for over 20 years. He has experience in business development, key account management, finance and project management in life sciences, consumer goods, real estate, and ICT industries.