Tiny is mighty when it comes to Zug’s performance across all the criteria in our Crypto Hubs 2023 rubric. With a small population, Zug scored highest overall for opportunity measures due to the richness of its per-capita crypto-related companies and events. The hub also had the highest ranking in the two heaviest weighted criteria overall, regulatory structure (a “driver” and 35% of total weight,) and quality of life (an “enabler” and 15%). Across the board, Zug had no glaring weaknesses.

For more on the criteria and how we weighted them, see: How We Ranked CoinDesk’s Crypto Hubs 2023: Our Methodology.

The most iconic origin story in crypto is the Bitcoin white paper by the mysterious Satoshi Nakamoto. The runner-up? The Ethereum launch in 2015 by a baby-faced Vitalik Buterin, who feverishly worked out of a small apartment in Zug, Switzerland, alongside other coders.

“It was like a shoe box. A family house. People were living there on mattresses, almost like a hostel,” Bernd Lapp, an early member of the Ethereum Foundation’s advisory board, told me a few years ago. He remembers that Buterin was “very kind, very nice” and would shop for groceries, peel carrots and then hand them out to the coders.

The birthplace of Ethereum is one reason why Zug is “literally the crypto cradle,” said Alexander E. Brunner, a former member of Zurich’s parliament and author of the book “Crypto Nation Switzerland.”

Another reason is the Swiss government. “You can deny it or you can face it,” Dolfi Müller, the former mayor of Zug once said of the emergence of cryptocurrency and blockchain technology. “We always said we have to face it, because these things are coming if we want or not.”

Read Crypto Hubs 2023: Where to Live Freely and Work Smart

So Zug faced it, working proactively to brand the region as “Crypto Valley,” their answer to Silicon Valley. For example, the government experimented with allowing citizens to pay their taxes with bitcoin. Then there was the clear regulatory framework. “Switzerland was the first country to have a guideline,” said Brunner.

Whereas regulatory limbo – or what some call “Operation Choke Point 2.0” – has soured crypto companies on making a home in the United States, in Switzerland you know precisely what you’re going to get, and they make it easy for you. There are even local “crypto banks” like SEBA and Sygnum, which provide crypto start-ups the basics like tax statements, coin storage and deposit insurance, said Brunner. (Rarer to find elsewhere in the world.)

This crypto-cozy environment is why the Ethereum Foundation, Cardano, Cosmos and hundreds of other projects came to Zug. Taxes are low, there’s fintech everywhere, Zurich University has a strong blockchain center, and the Zug government just pledged 39 million Swiss francs (~$43.7 million in USD) towards a blockchain research center.

Although there’s one bit of nuance: Zug itself isn’t packed with bars and crypto bros. It’s a small city. The population is less than 30,000 and as Brunner said with surprising bluntness, “It’s boring.” This is why, realistically, the idea of Zug as a crypto “hub” also factors in the larger cities of Zurich (only a 20-minute train ride away) and Bern and Geneva. “It has sort of spread across all of Switzerland,” said Brunner.

And while Zug might be a convenient place to legally park your company, it’s not always – or even usually – where you pay people to do the actual work. Switzerland is one of the few places on the planet that makes New York City feel cheap. “A lot of the developer talent doesn’t live in Switzerland,” said Brunner. “If you’re looking for the developer or coding community, Switzerland is not the place to be.”

Then again, it is very much the place to be if you want regulatory clarity, easy access to banks and VCs or just a relaxing dose of Swiss tranquility. Zug is almost cartoonishly pleasant. I spent a month in Zug in 2019, taking jogs by the lake and basking in the clean serenity. I went to a crypto meet-up in the CV Labs, billed as “the heartbeat of Crypto Valley,” a gleaming, five-story coworking space – focused on Web3, of course – that had, on its top level, floor-to-ceiling windows with imperial views of the Swiss alps.

But the vibe of these meet-ups have changed. Hoodies are out, suits are in. When Brunner went to crypto meetups a few years ago, people would say things like, “Bitcoin is going to kill the banks! We’re going to create a better financial system!”

You rarely hear that anymore in Zug crypto meet-ups. Instead, there’s a newfound appreciation for regulatory compliance, licenses and even partnership with the banks. “The more fringe side of crypto has kind of moved away,” said Brunner. Some might bristle at the loss of crypto’s wilder side, but the way Brunner sees it, “Crypto is growing up, in Switzerland.”