A city administration in Switzerland is looking to enable citizens and companies to pay their taxes in cryptocurrency in the ‘near future’.
Lugano’s public authority is in the process of obtaining ‘formal approvals and installing the technological infrastructure’ to enable the move, which is part of a broader ambition of implementing crypto acceptance for payment of all goods and services in the affluent lakeside city.
The mayor Michele Foletti and Pietro Poretti, who is director of the administration’s economic promotion division, are among those championing the Lugano-wide take-up of cryptocurrency – digital currency in which transactions are verified and records maintained by a decentralised system using cryptography, rather than by a centralised authority.
The city authority has a memorandum of understanding with a private company, Tether, as they look to ‘leverage bitcoin technology as the foundation to transform the city’s financial infrastructure’ through an initiative known as ‘Plan B’ (where the ‘B’ is written as ‘₿’, like the digital currency’s logo).
Lugano is the largest city in Italian-speaking southern Switzerland, with a population of more than 60,000 (and more than double that number in wider Lugano area). As part of a multi-pronged span of activity to encourage people and businesses to embrace cryptocurrency, the city’s government also wants to start accepting crypto payments for services such as naturalisation (acquiring citizenship) and parking fees.
Aim to ‘positively impact all facets of daily life’
Plan B’s aim is to ‘scale blockchain and Bitcoin throughout the city to positively impact all facets of daily life for the residents of Lugano’, according to the Plan B website.
From small transactions with local merchants to larger efforts – such as paying annual taxes – blockchain ‘will serve as the foundation for the city’s financial exchanges’, the website declares.
The city is already home to 3Achain, an ‘institutional blockchain platform’ promoted by the city administration; a loyalty points system, LVGA Points, that aims to encourage spending within the local economy (points are collected in a blockchain-based digital wallet within an app, ‘MyLugano’, and can be used to pay for goods and services in signed-up venues); and the Lugano Living Lab, which undertakes ‘experimentation and prototyping on an urban scale’.
Lugano is also the location of a planned ‘Centre of Excellence for Blockchain Adoption in Europe’, which was announced by Tether in March.
As well as the city authority’s push to enable crypto payments for public- and private-sector goods, it has also been stepping up efforts to encourage private-sector investment.
Tether itself is convening two funds: a CHF 100 million (about £85.6m) investment pool for blockchain start-ups, mainly intended to encourage more fintech companies to base themselves in Lugano; and a CHF 3 million fund for local businesses and merchants to enable them to accept crypto payments.
Approvals have so far been obtained for only Bitcoin, Tether and ‘select’ Swiss franc (CHF)-based stablecoins to be accepted for such payments, whereby funds will be converted in local fiat currency via different service providers, according to Tether.
Switzerland’s crypto ardour
Lugano’s move as interesting for reasons including that most authorities worldwide are currently more associated with working out how to regulate crypto rather than encouraging citizens to use crypto. The European Union (EU), for example, has been developing its Regulation on Markets in Crypto Assets (MiCA) – the first Europe-wide crypto standards.
An exception at the nation-state level is the country El Salvador, which implemented a law last year that means businesses must accept Bitcoin as payment. The Central American country’s president, Nayib Bukele, is well known as a crypto enthusiast.
In Switzerland – which is not part of the 27-member EU and has a total population of about 8.7 million people – Lugano is not alone as an area seeking to develop and promote a reputation as a crypto hotspot. The country is also, for example, home to so-called ‘Crypto Valley’ – a blockchain hotspot in the canton of Zug. Tours of Zug were included on the agenda of the ‘Point Zero Forum’, a three-day forum held last month to discuss innovation in ‘digital financial technology’ partly organised by the Swiss State Secretariat for International Finance (SIF).
In Lugano a city administration-backed ‘Plan B Summer School’, which sees Tether collaborating with local universities and research institutes, is taking place this month (July) to ‘bring blockchain and crypto education to the masses’. Students are learning about blockchain and crypto from perspectives including regulation (see embedded tweet).
Foletti and Poretti are also among the confirmed speakers for a Bitcoin-focused conference, ‘Plan B Forum’, due to be held in Lugano in late October. The event features a discussion on ‘nation-state Bitcoin adoption’ among other topics.
The Bank for International Settlements (BIS) – which is headquartered in the Swiss city of Basel – last month described the crypto universe as being ‘in turmoil’ in a chapter of its Annual Economic Report 2022 that set out a ‘blueprint’ for a future digital monetary system ‘grounded in central bank money’.