How Lugano wants to overtake Zug’s Crypto Valley

With a total package of measures, the city of Lugano wants to distinguish itself as the financial center and location of the future. It is a daring and at the same time surprising project.

The city of Lugano, which has been a bit of a wallflower economically for the past ten years, now presents itself as a . As of Thursday (yesterday) at the latest, there is no doubt about that.

The city has agreed a far-reaching partnership with Hong Kong-based technology company Tether. This aims to promote the use of cryptocurrencies in business and everyday life, while developing Lugano into an international blockchain hub.

Stable coin

Tether operates the platform for the world’s largest stablecoin. This is a cryptocurrency that is based on an underlying value – in this case the dollar – so that the price fluctuates little.

These plans are supported by a host of initiatives that leave little doubt that the city means business, as it turned out (yesterday) at an orientation with some 1,500 participants in Lugano on Thursday.

Urban cryptocurrency

This puts the largest city in Ticino, with a population of about 65,000, in direct competition with “Crypto Valley” Zug, which has so far claimed the leading role in the Swiss crypto world. But that could now change if Lugano succeeds in carrying out its ambitious plans.

“Lugano is investing in its future,” said Lugano’s mayor Michael Foletti on Thursday. “Our partnership with Tether will ensure a better and more open, transparent and intelligent city.” The announcement is the latest development in a process that Lugano initiated nearly two years ago.

In addition to a municipal app and its own cryptocurrency called Luga, the city also developed the blockchain 3Achain, with which about 30 partners from public and private companies in Switzerland are already working together.

Startup Hub and Grants

This cluster is now being further expanded and made accessible to both broad layers of the population and the business community. “We envision a future where businesses of all sizes can use blockchain technology to improve the quality of life and provide more sustainable financial and day-to-day services,” he said. Paolo Ardoino, technical director at Tether. Tether’s CEO also responded with a video message Jan Ludovicus van der Velde to speak and describe the blockchain world of tomorrow in the brightest colors.

In concrete terms, Lugano wants to establish more than 25 young companies in a startup hub that are involved in the said technology. This project is financed by several funds with at least three million Swiss francs, which should come from private sources. These funds will also be used to award scholarships to more than 500 students in Lugano pursuing cryptocurrencies and decentralized finance (DeFi).

Paying funeral expenses with bitcoin

In everyday life, it should soon be possible to pay all fees, taxes and other charges with Bitcoin, Tether and the local stablecoin Luga, including dog tax, naturalization costs or funeral costs, it turned out further on Thursday. In addition, Lugano is working on more than 200 stores that accept the mentioned cryptocurrencies.

A Bitcoin World Forum taking place in October should definitely make Lugano a hub of the crypto world. Hardly any other city has tackled these technologies of the future in such a comprehensive and targeted way. Lugano certainly benefits from its manageable size and relatively well-functioning infrastructure.

Mining with “green” energy

The financial know-how of the local banks, independent asset managers, trustees and tax specialists also contributes to the fact that there are good preconditions for this project.

Finally, Lugano also wants to focus on researching and promoting renewable energy, especially since mining cryptocurrencies requires a lot of electricity. One day, the goal should be for cryptocurrencies in Lugano to be made exclusively with “green” energy.

critical voices

Those responsible in the city will have to ask some critical questions about their project. Because the Tether company is not beyond all doubts.

In 2019, the fundamentally opaque company had to accept the accusation that it hid losses totaling $850 million on its system. Moreover, the coverage situation of the stablecoin Tether is unclear and backed not only by dollars, but also by other cryptocurrencies and loans.

In addition, the company’s headquarters in Hong Kong could also raise critical questions in the medium term, especially as the former British crown colony increasingly comes under Chinese control.

Lugano’s plan B

Widely billed as Lugano’s “Plan B”, the project fits into the city’s intention to revive its financial center after years of decline and to promote itself as a small but fine point of contact for local, as well as international and now also younger customers .

Unlike Zug, Ticino’s largest city already has a cluster in which all stakeholders for a financial center of the future are represented, ie companies, universities, the government, but also foundations and other financing organizations. The will to work together now seems greater than ever before.