Low tax Zug aims to become ‘Crypto’ hub

The small Swiss canton of Zug, famed for the low taxes that have drawn multinational companies and hedge funds to its lakeside shores, is trying to turn itself into a hub for virtual currency firms.

Over the past half century Zug has transformed itself from “the poorhouse of Switzerland,” sustained by fishing and manufacturing, into a headquarters for commodity giant Glencore and a home to the outposts of hundreds of global companies, becoming one of the country’s wealthiest provinces.

But with tax reforms and the end of banking secrecy posing a threat to its business model, the canton wants to reinvent itself as a “Crypto Valley” – a base for start-up companies using virtual currencies like Bitcoin and related technology.

In July, the town of Zug, the cantonal capital, launched a pilot program allowing residents to make Bitcoin payments for government services – a world first, according to Swiss media.

Together with a group of start-ups behind the “Crypto Valley” movement, Zug’s economic promotion board has so far persuaded more than a dozen virtual currency firms to set up shop there and in nearby towns.

These include Ethereum, the foundation that provides the technology behind ether, the main rival to Bitcoin, and digital currency exchange ShapeShift.

Mayor Dolfi Mueller says attracting more companies like this is central to the 2035 development plan the town has drawn up to ensure its economy can thrive as global tax laws get tougher.

“This is one of the most globalized small towns in the world,” Mueller said. “We don’t want to let that dynamic fall asleep.”

South African Johann Gevers was one of the first entrepreneurs to set up a virtual payment firm in Zug, establishing his transaction platform Monetas there three years ago.

Gevers’ business enables people without bank accounts to make digital payments.