Lugano has turned its partnership with Tether into a public test of crypto payments, drawing both investment and scrutiny. The Swiss city shows how a municipality and a stablecoin issuer can align, while critics question the risks.
Lugano, a Swiss city of about 63,000 people at the foot of the Alps, has spent the past several years building one of Europe's most visible partnerships between a municipality and a crypto company. Tether, issuer of the USDT stablecoin, has backed the city's 'Plan B' initiative and promoted Lugano as a place where residents and businesses can use digital assets in daily life.
The arrangement gives Tether something rare: a real-world showcase. Lugano gives Tether a European base for events, sponsorships and policy conversations. Tether gives Lugano money, technical support and global attention.
Plan B launched in 2022 with a simple pitch: make Bitcoin, USDT and a local token usable for taxes, municipal services and merchant payments. The city has also hosted crypto conferences and supported blockchain startups. Tether, whose USDT is the largest stablecoin by circulation, has funded events, grants and local projects through the partnership.
Paolo Ardoino, Tether's chief executive, has presented Lugano as proof that crypto can work in ordinary commerce. Mayor Michele Foletti has welcomed the investment and the attention it brings to a city better known for finance and tourism.
On the ground, merchants can accept crypto through payment processors, and residents can pay some municipal bills with Bitcoin or USDT. Many merchants settle in Swiss francs. Payment processors convert crypto payments at the point of sale. The practical benefit for a shopkeeper is marketing and access to crypto customers more than a change in accounting.
Critics focus on Tether's reserves and disclosure. Regulators and researchers have questioned whether USDT's reserves match its one-to-one pledge. Some economists and consumer advocates warn that a city's reputation can become tied to a private token issuer whose finances remain outside local oversight.
MiCA requires stablecoin issuers and crypto service providers to follow uniform rules across the European Union. Switzerland is outside the EU but aligns with many of its standards, and Swiss authorities have their own framework for digital assets. National and cantonal regulators watch how far a municipality can go, while Lugano promotes crypto payments.
If Tether faced a run, partners would share the fallout. Local officials counter that Lugano does not guarantee Tether's liabilities and that residents can choose francs.
Other cities and regions have tried similar strategies. Miami promoted crypto and launched a city token. El Salvador adopted Bitcoin as legal tender. Lugano's approach is narrower and more commercial, built around payments and events rather than national law. A narrower approach may produce smaller gains and smaller losses.
Next steps
The test for Lugano is whether crypto payments move beyond novelty. Metrics that matter include the share of merchants that keep crypto rather than convert it, the number of local jobs tied to blockchain firms, and whether regulators accept the model. Tether will shape the answer, because the company funds much of the ecosystem.
For now, Lugano serves as a small but telling case. It shows a stablecoin issuer using a city as a laboratory and a city using a crypto company to refresh its economic image. Whether that partnership produces lasting value or a cautionary tale will depend on regulation, adoption and Tether's own balance sheet.
Source:The Alpine crypto ‘wonderland’ forging close ties with Tether, Financial Times, Nov 13, 2026
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