Inside Lugano’s “Bitcoin city” experiment

If you walk into a McDonald’s in Lugano and order a coffee, you can tap your phone and pay with Bitcoin.

The terminals look like standard card readers, but they’re wired into the city’s crypto stack. The local government has distributed them free to hundreds of shops and restaurants as part of its Plan B initiative, launched in partnership with stablecoin issuer Tether. Around 350 businesses now accept BTC alongside Swiss francs, and the city even takes Bitcoin for some municipal services, including pre-school childcare.

It’s one of the densest clusters of real-world Bitcoin payments anywhere. But scratch beneath the surface and the trade-offs are obvious.

How Lugano built a live Bitcoin payment rail

Lugano’s setup is simple on the user side:

• Residents or visitors load prepaid “Bitcoin cards” — gift-card style vouchers purchased in francs.
• Value is held in BTC in a mobile wallet.
• At the till, the customer taps to pay; the merchant sees Swiss francs.

For merchants used to paying up to 3–3.5% on card payments, Bitcoin’s sub-1% processing fees look attractive. One luxury shop owner told the BBC he doesn’t see many BTC transactions yet, but sees the system “like a tree” that could grow over five to ten years.

On the infrastructure side, Plan B:

• Provides the terminals and wallet integrations.
• Onboards local businesses.
• Runs education programs to demystify custody, volatility, and tax questions.

The goal is straightforward: make Lugano a European hub where you can realistically live on Bitcoin day-to-day.

Circular economy or marketing wrapper?

Plan B’s director likes to stress that she managed to live almost entirely on Bitcoin for eleven days after a banking issue cut her off from her fiat account. Groceries, medical services, deliveries, and everyday retail were all doable in BTC, especially with home delivery from crypto-friendly shops.

But even in Lugano, important gaps remain:

• **No public transport or fuel** payments in BTC yet.
• **No energy bills** in Bitcoin.
• Only partial coverage across medical and professional services — “plenty of medical places, but not a dentist.”
• Large-ticket recurring payments (rent, utilities) are still fiat-only.

In other words, you can *spend* Bitcoin on a lot of discretionary items, but you can’t fully detach from the banking system. The “circular” part of the economy — earn, save, spend in BTC without touching fiat — is still aspirational.

Lessons from El Salvador and other “Bitcoin cities”

Lugano isn’t the first attempt at top-down Bitcoin adoption:

• **El Salvador** made BTC legal tender in 2021, a much bolder move than Lugano’s “optional rail.” But many people simply took the government’s $30 incentive, swapped it into dollars, and never used Bitcoin again. Merchant acceptance is uneven and usage remains thin outside tourist hot spots.
• **Ljubljana, Hong Kong, Zurich** and others have been ranked among the world’s most crypto-friendly cities, with dense merchant networks and ATM coverage, but real-world transaction volume is still tiny compared to card and cash flows.

The pattern:

• It’s relatively easy to launch a payment rail and onboard merchants.
• It’s much harder to build sustainable BTC-denominated flows when most salaries, rents, taxes, and corporate balance sheets are denominated in fiat.

Lugano is arguably the most coherent European attempt so far, but it’s still fighting gravity.

The reputational and volatility overhang

Local residents and academics also flag darker angles.

One economics professor interviewed by the BBC points out:

• Bitcoin’s volatility means merchants face **FX risk** if they don’t instantly convert incoming BTC back to francs.
• Crypto’s associations with crime, money laundering, and speculation can create **reputational risk** for cities and institutions that go all-in on promotion.
• Custodial risk is non-trivial: if the platform holding your BTC fails, there is no Swiss-style deposit insurance on your balance.

Those concerns mirror broader criticisms: Bitcoin is still seen by many as a speculative vehicle, not a settlement asset. When the price rips above $120,000 and then bleeds back toward $88,000, that perception is reinforced.

For Lugano’s merchants, the rational move is obvious:

• Accept BTC to attract tourists and crypto-natives.
• Auto-convert most flows back into francs to avoid balance-sheet whiplash.

That’s good for adoption optics, but it limits the size of any genuinely BTC-denominated economy.

Why Lugano still matters for Bitcoin’s story

Even with all these caveats, Lugano is important for Bitcoin’s political and cultural narrative:

• It shows a **European city government** can work with crypto-native firms to build real payment rails, not just sponsorship deals and conferences.
• It stress-tests how far you can push Bitcoin-as-money under today’s tax, accounting, and compliance rules.
• It surfaces the **real bottlenecks**: salaries, rent, utilities, transport, and regulation — not the coffee and burger layer.

If Lugano can slowly extend BTC payments into more “boring” categories — transit, bills, payroll, business-to-business invoices — it becomes a template for other mid-size cities and special economic zones.

If not, it risks becoming just another branding exercise: a beautiful lakeside town where you *can* spend sats, but almost no one actually does.

Either way, for serious Bitcoiners, the Lugano experiment is worth watching. It’s a live lab for the question that matters far more than number-go-up: can Bitcoin function as everyday money in a rich, tightly regulated economy without blowing up the people who accept it?