When El Salvador became the first country to adopt Bitcoin as legal tender in September, the cryptocurrency world erupted with excitement. It was a landmark move for digital currencies and a striking signal of what might come next. Enthusiasts quickly began speculating which country would follow.
Many expected another lower-income nation, reasoning that weaker currencies are more vulnerable to market swings and high inflation. Panama was a common guess — after El Salvador’s move, Panama quickly announced a bill to make Bitcoin a legal medium of exchange. Paraguay was also frequently mentioned, especially after it passed legislation regulating Bitcoin mining and trading just before Christmas. Most observers assumed the next adopter would come from Latin America, though forums also floated Honduras and Guatemala as possibilities.
No one guessed correctly. Yesterday’s surprise winner was not a nation at all but a small city in southern Switzerland: Lugano.
Lugano has a population of about 62,000, making it the ninth-largest city in Switzerland. Nestled on the scenic shores of Lake Lugano, the city looks as picturesque as a desktop wallpaper.
So what does this crypto news mean?
Lugano took a different approach than El Salvador, which put all its chips on Bitcoin. The Swiss city announced that Tether and LVGA (a CHF-pegged stablecoin), alongside Bitcoin, are now accepted de facto as means of payment.
On a macro level, El Salvador’s Bitcoin bet is far more consequential and economically significant — not least because a sovereign nation made the decision, not a small municipality. That said, Lugano’s move is not without practical effects.
Civilians can now pay taxes with cryptocurrency and use crypto to pay for parking, tuition, and municipal utilities. The city expects around 200 businesses to accept crypto payments for goods and services. So while Bitcoin won’t replace the Swiss franc, what’s especially interesting is the inclusion of stablecoins among the payment options.
El Salvador’s decision faced heavy criticism because Bitcoin is volatile and that volatility can be problematic for a legal currency. Stablecoins, by contrast, are designed to track fiat currencies and avoid wild price swings. That gives residents an attractive set of options: store savings in stablecoins, pursue yield through DeFi protocols, or make everyday payments like parking fees with minimal friction. Those choices are now available in Lugano.
Criticism
Unsurprisingly, critics will dismiss Lugano’s move as a publicity stunt. But what’s truly harmful about it? We’re talking about a 62,000-person city in the heart of Europe that likely wouldn’t be on many people’s radar without this news. What does the city stand to lose? The policy could stimulate blockchain startups, crypto-focused companies, and individual enthusiasts. Even a modest uptick in tourism would be a net win.
As noted earlier, the scale of the law is limited and unlikely to trigger the dramatic consequences skeptics warn about when citing El Salvador. The International Monetary Fund urged El Salvador last month to narrow the scope of its Bitcoin law and strip its legal tender status — but that kind of pressure is unlikely to reach the mayor’s office in Lugano. Concerns about financial stability, citizen protection, and fiscal obligations that apply to a small country with limited public resources don’t translate to a Swiss municipality with a different institutional framework.
Tether
Tether is partnering with Lugano. Tether’s chief technology officer, Paolo Ardoino, said at yesterday’s Plan B event that the company and Lugano officials created a fund worth 3 million Swiss francs to support the rollout of Bitcoin, Tether, and the LVGA token. He reiterated their core objective: to make the city a recognized European blockchain hub.
This is an intriguing development within an ever-evolving crypto landscape. It remains to be seen whether Lugano can attract talent, businesses, and traders to its picturesque shores.
So, who’s next?