The Beginning - The Story of Crypto Valley

Transcript

When I looked into it, there was no ecosystem anywhere. There were isolated companies or people interested. And so I thought, “well, then we need to build an ecosystem.” Then I started scouting for locations. I actually traveled around the world to these different locations to see them in person. “Blockchain, what is this?” we asked ourselves back then. We first had to get an idea about this technology. Where is the potential? Actually, we got moving surprisingly quickly.

But that didn't happen by accident. It was through clear strategy, through talking with different people and building relationships and so on, the whole thing started going. They called us on the phone and asked, “can we meet?” “Of course,” we said, and we sat in this room right here, very dry and simple, like always, when companies want to move here. Then we talked about their idea.

We noticed right away that these entrepreneurs were really inspired by this idea, by this vision, that you could provide financial inclusion to everybody around the world. We already had two industrial sectors based here and established firmly that were important for the nascent blockchain scene. We already had a healthy IT or ICT industry, and second, we had the financial service providers.

Today, you would call that fintech, and that's somehow the starting point for blockchain technology. This helped us attract a lot of know-how from the region, and the blockchain space benefited from this. Anything to do with crypto had a very bad name. Most people hadn't heard of it, and if they had heard of it, it was negative. We were convinced quite quickly that blockchain has a huge potential far beyond financial flows, for example, also in supply chains.

We thought, “that could really become a cluster that’s interesting for Zug.” There is no master plan where you say, “I want a blockchain scene here,” or “I want a nanotech scene.” In our experience, this doesn't work. In our case, it was successful, as far as I can say that after ten years, because the vision of these people perfectly matched with our location here. What we contributed was basically

networking, helping to get the framework conditions right, particularly the legal framework and the regulatory framework, FINMA is a keyword here. We made big efforts that critical decisions were made much more quickly, and that framework conditions were established, for the space to emerge and flourish. The environment for crypto wasn't friendly from day one. We had to work to create that. Anyone could buy coins or tokens without any proof where the money came from. This is, of course, against any banking regulation.

That's why banks were quite hesitant and even hostile, which was difficult for the blockchain space. There were difficulties in setting up startups that made it almost impossible to raise money and not to immediately face a huge tax bill. We clearly said from the beginning it can’t just be the canton of Zug, Zurich, for example, must also join in. As a result, in a few years we established a completely new legal framework.

Once Zug established a tax ruling that was favorable, that we could use, some of the other cantons started copying that. We didn't want a blockchain legislation, but a technology-neutral legislation. So we adjusted paragraph by paragraph that it worked with specific questions that mattered for blockchain technology. This was crucial for the development of the space. Yeah, they've done important work and they need to do further work going forward.

But these are the things that are very, very important and will keep being important to make Switzerland succeed in this area.