Cryptocurrencies like Bitcoin have suffered unprecedented losses this year. Major digital currencies like Tezos or Cardano in the Zug crypto valley are not spared the bearish trend either. Mathias Ruch (46) is unaware of the serious losses in his industry. “I don’t look at the price of Bitcoin every day,” said Zug, co-founder of Crypto Valley Venture Capital (CV VC), calmly as he looked into the heart of the crypto valley. Here in Mathias Ruch, right next to the train station, over 150 blockchain companies are leased on four floors.
What are the consequences of the collapse for your company and the Zug Crypto Valley?
Mathias Ruch: None for us. We invest in blockchain companies and technologies, not cryptocurrencies. The correction does not directly affect companies either. Here in Zug the day-to-day business continues as before. The entire financial market is currently undergoing a correction – not just cryptocurrencies. Not so long ago, many still believed that cryptos provided inflation protection and were unrelated to other investment classes. Today we know that is not true.
The market cap of all cryptocurrencies has dropped from $3 trillion to $1 trillion. Even in Zug, you can’t avoid damaging your reputation.
I categorize this fix as normal. Most blockchain companies didn’t exist six years ago. The entire industry is incredibly young. It can be expected that some ideas will not work. And in 2021, more and more ignorant investors entered the system, access was suddenly very easy. Sooner or later this bubble was bound to burst. This is good for us as the high ratings have dropped. As an investor, this is the perfect moment to get your hands on the money again.
Thanks to its crypto valley, Switzerland is one of the leading countries in the blockchain industry. What makes us so attractive?
The main reason for this is the stability and security of Switzerland. From a tax standpoint, Switzerland and Zug are particularly attractive. Universities have a brilliant power. Anyone who comes to Switzerland with their company knows where they are. Our country has been a leader in this field from the very first day, quickly issued the first rules and continuously improved them. Today, most of the very large blockchain companies are in Switzerland. It’s like Google and Amazon came to us in the 1990s! But unfortunately we are currently in the process of taking the lead…
… What do you mean by that?
Switzerland is resting on the bay. We may have one of the most advanced blockchain laws in the world, we have the Zug crypto valley with 1200 companies – but that seems like enough for us. Switzerland is considered one of the most innovative countries in the world. That may be true, but we’re also frugal. Now you can practically feel it. Things are no longer moving, you often encounter regulators and authorities, sometimes you have to endure very long waiting times before getting an answer to a question or a problem. The result: The first companies migrated abroad from Zug and found safe haven, for example, in Singapore.
In countries like Singapore and the USA, there is a sovereign wealth fund that blockchain companies also take advantage of in the beginning. Does the Zug crypto valley need tax money too?
The fact that we do not have such a sovereign wealth fund is a clear competitive disadvantage. A national startup fund will help us and our progress to Switzerland. It is important that the state does not want to generate ideas or shape processes. Execution should be left to the private sector.
Meaning: Switzerland should support the industry with funds, but not interfere.
To put it bluntly, yes. Look: The foundations of the World Wide Web (WWW) were laid in 1989 at the CERN in Geneva. In the US, only Google, Facebook, Amazon and Co. did great things. Switzerland missed a great opportunity back then. Now, 33 years later, we have a new opportunity with blockchain, an evolution of the internet. A start-up fund will help strengthen the position and create growth for generations to come.