📅 Original post: August 2017 | Last updated: May 2026 This field note was first written shortly after Ethereum’s first major upgrade cycle. The origin history section has been verified against primary sources and updated with retrospective detail from co-founder accounts published 2020–2024.
The version of this story that gets told most often goes something like: Vitalik Buterin chose Switzerland because of low taxes and crypto-friendly banking. That version is not wrong exactly, but it is missing the part that actually mattered in 2014.
The real story is a legal structure problem, a bank account problem, and a six-person email chain problem — and Zug solved all three at a moment when no other jurisdiction in the world had the right framework to do it.
What Most People Think They Know (and Where That Goes Wrong)
Ask someone why Ethereum ended up in Zug and you will hear two common answers. The first: Switzerland has favorable taxes, so it was a tax play. The second: Switzerland is crypto-friendly, so the regulatory environment made it obvious.
Both answers are too simple for 2014.
In early 2014, Switzerland’s wealth tax environment had nothing specific to offer a blockchain foundation that planned to conduct a public token sale — a structure that had essentially no legal precedent anywhere. And “crypto-friendly” regulatory environment in 2014 meant something much narrower than it does today. FINMA had issued a statement in early 2014 that it would not formally regulate Bitcoin as a currency, which created a window of legal ambiguity that was, counterintuitively, more useful than formal regulation at that stage.
The question the Ethereum founders actually needed answered in early 2014 was not “which country has the lowest taxes.” It was: “Which legal structure lets us raise funds from the public in exchange for a digital token, hold those funds in a transparent and legally defensible way, and distribute them to developers without any single founder personally controlling the treasury?”
That is a foundation law question. And the answer — in 2014 — was Zug.
The Two Legal Entities Nobody Explains
The confusion about “why Zug” partly comes from a failure to distinguish two separate legal entities that Ethereum set up in Switzerland, in two different months, for two different purposes.
EthSuisse — Ethereum Switzerland GmbH, a standard Swiss limited liability company — was established in early 2014 in Zug. This was the operational vehicle. Gavin Wood developed the Yellow Paper (the technical specification for the Ethereum Virtual Machine) under this company. It gave the team a legal address, allowed them to hire, and provided the contractual backbone for development work. EthSuisse is the entity that formally conducted the ether presale.
Stiftung Ethereum — the Ethereum Foundation — was registered on July 9, 2014, also in Zug. This is the non-profit foundation that receives and stewards the funds raised. Once the presale completed, operations transferred from EthSuisse to the Foundation. EthSuisse was eventually liquidated.
Why both? Because Swiss foundation law separates the fundraising mechanics from the fund custody in a way that made the legal risk manageable. The foundation cannot distribute funds to its founders as profit. It is legally obligated to use assets for its stated purpose — in this case, supporting Ethereum’s development. For a 2014 token sale with no regulatory template, that structural constraint was a feature, not a limitation. It made the presale defensible to participants: the funds would not simply disappear into a founder’s pocket.
This is the part of the origin story that gets glossed over in the “Switzerland has low taxes” summary. The tax environment was a secondary benefit. The foundation structure was the primary enabler.
The June 7 Meeting and the Decision to Go Non-Profit
The legal structure was not inevitable. It was decided at a specific meeting, on a specific date, in Zug.
On June 7, 2014, all eight of Ethereum’s co-founders gathered in Switzerland for an internal summit. The gathering happened at a rented house that the team called “the spaceship” — a modest property in the Canton of Zug that functioned as something between a meeting room and a hostel. Ethereum Foundation advisor Bernd Lapp later described it: “It was like a shoe box. A family house. People were living there on mattresses, almost like a hostel.”
The agenda was consequential: what kind of entity should Ethereum be? The options on the table ranged from a for-profit company to various partnership structures to a non-profit foundation. Vitalik Buterin, at that meeting, told the assembled co-founders that the project would proceed as a non-profit. The decision was not unanimous in the room — it meant some co-founders would receive significantly less financial upside than a for-profit structure would allow. Charles Hoskinson and Amir Chetrit, both of whom had pushed for a commercial model, departed the project shortly after.
The non-profit decision required Zug. Not every jurisdiction’s foundation law would have served. The Swiss Civil Code foundation structure (Stiftung, governed by Art. 80–89a ZGB) allowed the team to hold a large pool of presale funds in an entity that was legally separate from its founders, transparent about its purpose, and not subject to the investor-return obligations that corporate structures carry. Luka Müller, the Zug attorney who set up the foundation, navigated the regulatory groundwork that made the July presale viable.
The Person Who Actually Did the Paperwork
Vitalik Buterin is the name that attaches to Ethereum’s founding. The person who made Ethereum’s Zug presence operationally possible is less often mentioned: Mihai Alisie.
Alisie, one of the eight co-founders, handled the administrative groundwork that most blockchain origin stories skip. He incorporated the initial Swiss startup. He opened a bank account for the project — “not an easy process,” as he later described it, understating considerably the difficulty of convincing a traditional Swiss bank to take on a crypto company in early 2014. He dealt with lawyers, Swiss officials, and the regulatory framework necessary to conduct the presale legally.
While doing this work in Zug in 2014, Alisie coined a phrase in conversation with the city’s economic promotion office. Discussing the potential for Zug to become a hub for blockchain companies, he described it as a “Crypto Valley” — a Silicon Valley for the emerging technology. The name stuck before the concept it described fully existed.
The Crypto Valley Association would not be formally founded until January 2017. But the term was circulating in Zug from 2014, rooted in Alisie’s conversations with local officials during the period when he was doing the legal groundwork for Ethereum’s Swiss structure.
Alisie served as vice-president of the Ethereum Foundation until late 2015, then shifted focus to Akasha, a social application built on Ethereum. The administrative work he did in 2014 remains the operational foundation of everything that came after.
The Presale: July–September 2014
With EthSuisse operational and Stiftung Ethereum registered, the fundraising proceeded.
The ether presale ran for 42 days: July 22 to September 2, 2014. Participants sent Bitcoin to an address controlled by EthSuisse and received newly issued ether in return. The price structure offered an early-buyer discount: the first 14 days priced ether at 2,000 ETH per BTC, stepping down to 1,337 ETH per BTC by the end.
The result: approximately 60 million ETH sold, against roughly 31,600 BTC received — worth approximately $18.3 million at 2014 exchange rates. The presale established the Ethereum Foundation as one of the best-capitalized non-profit protocol development organizations in the world at that time.
The legal structure held. There were no successful regulatory challenges to the presale in Switzerland. The Foundation’s transparency about how it would use the funds — publishing its development roadmap and budget allocations — set a model that subsequent Zug-based token sales would attempt to replicate, with varying degrees of rigor.
Devcon 0: Berlin, November 2014
One month before Ethereum’s first public developer conference, the team was still in Zug — or scattered across Europe — doing protocol development under the ETH DEV organization, which managed Ethereum’s technical work under contract from EthSuisse.
Devcon 0 happened in Berlin’s Kreuzberg neighborhood in late November 2014. Around 100 developers attended. The event was deliberately modest: a gathering to outline work-in-progress designs and coordinate the distributed team, not a public announcement or marketing exercise. Most attendees already knew each other through the development mailing lists.
The Berlin location was practical rather than ideological — the city had a significant developer community and lower costs than Zug. But the organizational center of gravity remained in Switzerland. The Ethereum Foundation was in Zug. The legal structure was Zug-based. Devcon was an event; the foundation was a headquarters.
What 2014–2017 Built in Zug
Between the foundation’s registration in July 2014 and Ethereum’s mainnet launch on July 30, 2015, the team worked from the Zug canton. The “Spaceship” house became the informal hub — developers working unusual hours, Buterin handling logistics alongside protocol design. The image that came out of that period (modest accommodations, intense focus, no meaningful revenue yet) contrasts sharply with the Crypto Valley of 2026, which hosts 1,749 blockchain companies and $728 million in disclosed 2025 investment.
But the Ethereum Foundation’s presence in Zug had an immediate network effect on the local ecosystem. Within three years of the 2014 registration, approximately 40 crypto foundations had been established in the Canton of Zug, most modeling their legal structure on the Stiftung Ethereum template. The pattern Alisie, Müller, and the founding team established — Swiss foundation, non-profit purpose, Zug address — became the default playbook for blockchain projects looking for legal clarity in a period of global regulatory ambiguity.
The Crypto Valley Association, formally established in January 2017, arrived after most of the foundational infrastructure already existed. Ethereum created the template. The Association gave it a name and an organization.
The Misconception in Summary
The “Switzerland has low taxes” explanation is not fabricated — Swiss cantonal tax rates, particularly in Zug, are lower than most EU jurisdictions, and the wealth tax structure (no capital gains tax on crypto for private investors) does make Switzerland attractive for long-term holders.
But none of that was the deciding factor in June–July 2014.
The deciding factor was that Swiss foundation law offered a legal container for a public token sale that no other jurisdiction had made available by that point. The container was transparent, founder-independent, purpose-bound, and defensible. The alternative — running an unstructured presale from no clear legal entity — carried risks that the Ethereum team correctly judged as existential to the project.
The tax environment helped Zug retain projects after the initial structural decision. The Swiss regulatory posture — FINMA’s willingness to engage with the space rather than shut it down — made subsequent projects willing to follow the Ethereum Foundation model. The combination of legal clarity, regulatory accessibility, and an already-established peer group in Zug created the conditions that attracted the next 40 foundations, and the 40 after that.
But it started with a legal problem that needed a specific answer in 2014. Mihai Alisie found the answer in Zug. Luka Müller helped implement it. And the term “Crypto Valley” was coined in that same operational period, in conversations about what Zug might become — before it had fully become it.
The rest is the history you can read in the official reports. This is the part that tends to get compressed into a single sentence about taxes.
Related field notes: What Crypto Valley Actually Looks Like in 2026 — the ecosystem that grew from this 2014 foundation, in numbers. The ICO Boom Seen From Zug: What 2017-2018 Was Actually Like — the wave that followed Ethereum’s legal template, when it started getting applied carelessly. MiCA vs FINMA: A Field Note from Someone Who Watches Both — how the regulatory framework that made Ethereum possible in 2014 compares to today’s Swiss and EU frameworks.