Zug wants to be "Crypto Valley."
Municipal bosses in the Swiss town of Zug have decided to accept the bitcoin cryptocurrency for payments up to the value to 200 francs ($206), in a new pilot project.
Zug, traditionally known for its low taxes (about half the Swiss average) and its kirschwasser cherry brandy, is these days trying to brand itself as the slightly sinister-sounding “Crypto Valley”—it’s home to more than 15 financial technology (fintech) firms, and now it wants to dive even deeper into the future of virtual currency.
Dolfi Müller, Zug’s social-democratic mayor, said the town wanted to express its openness to new technologies and offer its support to the region’s fintech sector, by letting people use bitcoin to pay for some municipal services.
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The town council decided last week to start accepting bitcoin from July 1, and at the end of the year it will look at the lessons it has learned from the exercise. It will then decide whether Zug should accept bitcoin and other cryptocurrencies for more municipal services in the future.
Bitcoin allows people to make payments without having to involve centralized connection mechanisms such as banks. It is fairly good at protecting anonymity, but uses a public ledger system, called the blockchain, that is excellent at keeping track of transactions.
It’s probably highly relevant that bitcoin’s transaction costs are low. Zug’s municipal bosses are currently looking for ways to cut costs, as the implications of levying very low taxes start to bite.
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However, not everyone is convinced that Zug’s experiment is a good idea.
The local branch of the conservative-nationalist SVP party wrote to Zug’s greater council, asking what the legal basis was for the town council to be deciding on which currencies it could accept, and what projections had been made for the rise or fall in bitcoin’s value—it is, after all, a pretty speculative currency.