Even if Tether will not receive any payment from the city as part of its involvement in Lugano’s Plan B, Ardoino says that by helping global crypto acceptance grow, Tether and its parent company, the cryptocurrency exchange Bitfinex, will end up having more business.
“If many countries adopt bitcoin it will be a win-win because we are in this industry,” he says. Certainly, the inclusion of Tether in the trio of cryptos accepted and promoted by Plan B will be beneficial to the company itself. In a written response to a question by Beretta Piccoli, seen by WIRED, the city government said that the fact that the “quasi totality” of Tether’s managing team lives in Lugano was a key factor in clinching the partnership. Tether itself is not based in Switzerland, although Ardoino says that it is considering moving “some sections” of the company to Lugano, and it has been hiring staff dedicated to the partnership.
Ardoino says that Tether is currently working with two more local governments to explore similar partnerships, but the company has declined to name them. “We are educating them, right?” he says. “Then it’s up to them to see if they will go for it or not.”
In Lugano, there are still a ton of outstanding issues, including the fact that the city has not yet started accepting crypto payments for taxes and public services, although Bregy expects a partial rollout to begin by the end of 2022. While the city has confirmed that bitcoin payments will use the fast Lightning network—which solves the issue of crypto payments’ usual slowness—and stablecoin payments will be settled through the Polygon blockchain, Bregy says that the city will not be able to put cryptocurrency on its balance sheet, and it is currently “scouting” for companies able to help with the immediate conversion of crypto to Swiss francs. However, these third-party services usually charge fees for their services, which may mean that people paying taxes in crypto have to pay more than if they were using regular francs. Ardoino, however, who is helping the city select the best provider for this service, says that fees will likely be very low—“about maybe 20 to 30 basis points,” he says. Ardoino says that none of the companies being considered are affiliated with Tether.
He also says that Bitfinex might sell its services to Lugano’s merchants who need to convert crypto payments into fiat—unless the shopkeepers themselves decide to just hold the cryptocurrencies without conversion. That would be tricky, though, given Lugano’s relatively high taxes on capital gains, let alone the vagaries of bitcoin’s price.
Some individual merchants, Bregy says, have already started accepting crypto payments in order to attract more customers, although that happened without any input from the city. An article in a local newspaper reports that some businesspeople in Lugano think the move will help them grow their customer base.
“A restaurant accepting bitcoin will attract people who pay in bitcoin,” says Schlichting. “Initially, in my opinion, this will mostly boil down to marketing. But the final purpose is digitizing society and Lugano’s canton.”
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