A bit of media hype has been circling in the bitcoin space these past few days with the tiny city of Lugano in Switzerland claiming they will roll out the red carpet for bitcoin and blockchain-based businesses and investors. In a bid to attract capital, jobs, and new opportunities to the Italian-speaking city of 63,932 the city officials announced it will be making bitcoin, USDT, and their own shitcoin defacto legal tender for public services or to pay taxes.
Pietro Poretti co-announced the news alongside mayor Michele Foletti and CTO of Tether Paolo Ardoino.
The city has been working on bitcoin and lightning payment adoption in previous months bringing in a network of over 200 merchants but now feel the need to ramp up use of bitcoin in the region.
Now this seems more like a media stunt for the city and a little bit of good PR for Tether and Bitfinex who haven't had the best reputation and are looking to clean up their operations. They've been heavily involved in the launch of El Salvador's volcano bonds and this looks to me like their next pet project.
“This is probably the most important thing of this project,” Ardoino said, referring to “Plan ₿,” a city initiative being sketched and worked in collaboration with Tether to attract wealth, smart minds, and opportunities. - Said Paolo Ardoino.
The Plan ₿ project aims to physical venue in the heart of the city to function as a hub for Bitcoin and blockchain startups interested in relocating to a place that has friendly regulation and more infrastructure.
This could also be seen as a bid to bite off a piece of all the shitcoin investor capital floating around Zug. VCs operating in the region are cash-rich and brainless and will fund basically any European with an idea for a shitcoin.
Attempting to copy El Salvador's playbook
EL Salvador has seen close to a double-digit increase in GDP given it from a low base but what would it otherwise have been especially considering the last two years. The success or relative success rather is now used as a blueprint for others to copy. We've seen Rio in Brazil accepting bitcoin as payment for tax and the city looking to build a treasurey along with 1% allocation too.
But having a European city even this small do it, will be interesting to see if they get blow back or will it provide growth.
“El Salvador’s GDP increased by 10% and its tourism by 30% after declaring bitcoin a legal tender,” Ardoino said. “Imagine what we can do in a city at the center of Europe.”
Putting money behind the backing
Plan ₿ also provisions the creation of two investment funds. The first will allocate up to $3.26 million to push bitcoin, USDT, and LVGA, the city’s own stable coin adoption. Something I see as a waste, why would you need USDT or a secondary stable coin when you already have the Swiss Franc, just seems like unnecessary complications and a way for some to benefit off of creating your own coin.
Given the unreliable news out of USDT taking on this faux Euro-dollar system could also create systemic risk for the city, if it were to blow up due to lack of backing spooking holders to dump the token. But that's just speculation from my end.
The second pool of funds of up to $108.6 million is designated for Bitcoin and blockchain startups that wish to relocate and set up their headquarters in the city and migrate personnel to the Swiss town.
Mining operations in the works
The only announcement I was bullish on is the intention to have Lugano start mining bitcoin as the city looks leverage to employ renewable energy sources to yield BTC for its local treasury. I am always happy to see more competition in mining, decentralizing outflows of block rewards, and having people realize the benefits of having an energy buyer of last resort.
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