On Monday evening, a few dozen shopkeepers and businesspeople gathered in the blue-carpeted hall of a conference center in the Italian-speaking city of Lugano, Switzerland, to learn how to start accepting cryptocurrency payments. Addressing them, alongside a lineup of accountants, entrepreneurs, and city officials like Mayor Michele Foletti, was Paolo Ardoino, the chief technology officer of Tether, the company behind one of the world’s most popular stablecoins (a kind of cryptocurrency whose price is pegged to that of real-world currencies like the dollar). Lugano’s general secretary, Robert Bregy, says that the merchants in attendance were “much more interested in these new kinds of payments than we expected.”
The meeting is part of Lugano’s Plan B initiativelaunched in March 2022 in partnership with Tetherwhich aims to make the city a hub of crypto innovation. Aside from a raft of investments in business and educational programs about blockchain tech, and the organization of industry events, the flashiest element of the plan is that the city will start accepting bitcoin, tether, and its own LVGA cryptocurrency as payment for municipal taxes and access to some public services and events. The city also committed to encouraging and aiding local businesses to voluntarily include those cryptocurrencies in their accepted payment methods (a tough sell, amid the current monumental collapse in bitcoin’s price).
The move is quite explicitly designed to attract technological talent, companies, and monied cryptocurrency owners to a city that—while boasting stunning vistas and a relatively mild climate—still lags behind other parts of Switzerland in terms of economic growth. Bregy says that so far , the plan seems to have worked, as the city has been “under siege” from cryptocurrency companies, entrepreneurs, and students looking to relocate there. Lars Schlichting, a lawyer with Swiss legal firm Kellerhals-Carrard who specializes in the crypto sector, says that he is currently working with “at least 10 companies, which is much higher than usual,” all looking to relocate to Lugano.
Ardoino says that Plan B is a way to put down a “red carpet” for companies and cryptocurrency fans who want to flock to Lugano. But Tether itself will be front and center: Since the plan was announced, the company has become the de facto project manager of Lugano’s crypto capabilities, wielding significant clout in shaping the city’s digital fortunes.
Lugano is now in competition with the German-speaking canton (or state) of Zug, the Swiss region renowned for its crypto activity, which over time has acquired the moniker of “Crypto Valley.” While small and sleepy, Zug has some of the lowest corporate income tax rates in the country going for it—a factor that helped it attract several high-profile organizations in the crypto space, notably the Ethereum Foundation. Zug also allows cantonal taxes to be paid in bitcoin or ether, Ethereum’s cryptocurrency.
Lugano’s plan seems to push the envelope further, extending the acceptance of crypto payments to a wider gamut of public services, and in general integrating crypto more deeply in its economic fabric. Bregy says that whereas Zug’s appeal is mostly based on tax reasons, Lugano’s pitch is as “an ideal place to live, do crypto business, and thrive.” He adds that the city’s tax rates will never go down to Zug’s levels in the foreseeable future.