The city of Lugano is looking to establish itself as a financial center and business location of the future. It's moving ahead with bold and surprising initiatives. 

Lugano, in the Italian-speaking canton of Ticino, is seen as more of a getaway location than an economic powerhouse. Now it's presenting itself as a financial center of the future (in German). 

The city has agreed to a far-reaching cooperation with the Hong Kong-based technology company Tether, with plans to promote cryptocurrencies in the business world and in everyday life, while developing Lugano into an international blockchain center.

Stable Coin

Tether operates the platform for the world's largest stablecoin, a cryptocurrency pegged to an underlying value, in this case, the dollar, in order to mitigate price fluctuations.

The variety of initiatives in the works leaves little doubt the city is serious, as was learned Thursday at an event in Lugano.

Municipal Cryptocurrency

Ticino's largest city clearly has ambitions to challenge Zug’s «Crypto Valley,» which has so far been king of the Swiss crypto world.

«Lugano is investing in its future,» Lugano Mayor Michele Foletti said Thursday. «Our collaboration with Tether will create a better and more open, transparent and intelligent city,» he added, commenting on the latest developments on a project which began nearly two years ago.

In addition to a city app and its own cryptocurrency called Luga, the city also developed the blockchain 3Achain, already being used by some 30 partners from both public and private companies in Switzerland.

Startup Hub

This cluster will be further expanded and made accessible to a broader population and businesses.

«We envision a future where companies of all sizes are able to use blockchain technology to improve quality of life and provide more sustainable financial and everyday services,» said Paolo Ardoino, technical director at Tether.

Lugano seeks to locate more than 25 young companies in a startup hub, financed through various funds from private sources with a goal of raising at least three million Swiss francs. The funds will also be used to provide scholarships to over 500 students in Lugano studying cryptocurrencies and Decentralized Finance (DeFi).

Crypto City

The goal is to make it possible to pay all fees, taxes and other charges with Bitcoin, Tether and Luga, including dog tax, naturalization fees or even funeral costs. Additionally, Lugano is working to have more than 200 stores accept cryptocurrencies.

A Bitcoin World Forum scheduled for October could definitely help make Lugano a hub of the crypto world. Hardly any other city has embraced these technologies as comprehensively as Lugano.

«Green» Energy Mining

The existing financial know-how of local banks, independent asset managers, trustees and tax experts contribute to a solid framework for the project.

Lugano also seeks to further research and promotion of renewable energy, particularly since cryptocurrency mining consumes vast amounts of electricity. Cryptocurrencies created in Lugano will do so exclusively with «green» energy.

Critical Voices

Still, there are some critical questions about the project which city managers will have to address since Tether is not above reproach.

In 2019, the company was accused of concealing a loss of $850 million on its system. Moreover, the underlying peg of Tether is unclear since it is not exclusively backed by dollars, but also by other cryptocurrencies and credits.

The company's Hong Kong headquarters could also raise critical questions, especially as the former British crown colony is increasingly coming under China's control.

Lugano's Plan B

The project announced as Lugano's «Plan B,» is aligned with the city's efforts to revitalize its financial center after years of decline, and to establish itself as a small but sophisticated hub for not only locals but increasingly younger international clientele.

If successful in taking on Zug's «Crypto Valley,» Lugano might earn the sobriquet «Crypto Lakefront.»