Businesses must accept cryptocurrency in daily transactions, according to the municipality.
Lugano, Switzerland, has partnered with stablecoin issuer Tether to make bitcoin. Tether and Lugano’s own LVGA Points token effectively legal cash in the city. It has the goal of becoming Europe’s Bitcoin capital.
The decision goes above and beyond the efforts of a handful of other Swiss municipalities that have been accepting crypto for tax payments for some time. Lugano, like El Salvador, wants all of its businesses to utilize crypto for regular transactions (in El Salvador, only bitcoin qualifies).
The action was termed as a “de facto” legalization at Thursday’s “Plan B” event. Lugano’s mayor, Michele Foletti, sponsored it because the Swiss franc will undoubtedly remain the true legal tender in Lugano and throughout Switzerland.
18 Months in the Making
Pietro Poretti, the director of Lugano, said the decision to recognize Bitcoin and Tether as legal tender took 18 years. Blockchain technology and cryptocurrency payments began the experiment with in late 2020. This when the city launched a loyalty program utilizing its own token, LVGA. All LVGA token transactions took place on Lugano’s Proof-of-Authority blockchain, which the city built last year.
Although none of the panelists stated it specifically, El Salvador’s decision to recognize Bitcoin as de-facto money in September accelerated the decision to adopt Bitcoin as legal tender.
The city worked with Tether to recognize its own stablecoin, USDT. This is as legal tender alongside Bitcoin in order to accelerate its blockchain adoption. Companies that choose Lugano will be able to take advantage of a large incentive package the city has put together with the help of Tether.
According to Tether’s chief technology officer, the company worked with the city to set up a joint venture. Tether’s CTO, Paolo Ardoino established a $100 million incentive fund for businesses moving their headquarters and employees to Lugano. Entrepreneurs who relocate their headquarters and staff to Lugano will be eligible for a 00 million incentive fund. It will also contribute to the development of Lugano’s startup ecosystem. This is by creating a hub for tech startups from around the world.
In order to facilitate stablecoin payments in Lugano, Ardoino named Polygon as its key infrastructure partner. Polygon is the second-largest network after Ethereum, and it hosts Tether’s USDT stablecoin. He explained that Polygon’s low latency, great scalability, and low cost will allow for seamless settlements of all USDT payments in the city. This is especially important that Lugano’s anticipated size of crypto adoption.
According to Poretti, a significant effort already made to bring Bitcoin payments to the public sector. Virtually all public services, including personal and municipal taxes, naturalization fees, access to public infrastructure, and document issuing fees, are already available to citizens in cryptocurrencies.
In the private sector, a similar level of acceptance will take place. Over 200 firms, according to Poretti, have already set up the required infrastructure to take BTC, USDT, and LVGA payments. Over 5,000 Lugano residents have used the city’s LVGA payment token. They can make daily purchases to these companies in the last month.
The city’s intentions to transform into a crypto utopia appear to be well-considered.
Lugano, with over 60,000 people, could face a severe labour shortage if it can attract even a percent of the businesses it hopes to attract. Furthermore, Tether and Bitfinex are already collaborating with Lugano’s three major institutions to promote blockchain and crypto-focused education, according to Ardoino.
The two businesses are also collaborating with academics to develop curricula that will aid colleges in producing a blockchain-savvy workforce. Ardoino also revealed that the corporations put aside funding for 500 scholarships for students studying blockchain and cryptography.