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It was early May when the Swiss town of Zug convened a city council meeting. By the end of it, bitcoin was accepted as a valid mode of payment for municipality services, part of a pilot program.
Fintech-friendly Zug, a picturesque and serene town on the banks of lake Zug made headlines in May after gaining the distinction of the first municipality or locality in the world to accept bitcoin. The cryptocurrency was accepted by the city council as a part of a pilot program, enabling adopters and users to pay for municipal services with the cryptocurrency.
The considerable media coverage that followed the city council’s move surprised Zug’s mayor, Dolfi Müller. Zug had already garnered a reputation for being innovation-friendly with relaxed controls and regulation. Still, Müller had a statement for bitcoin, specifically, in quotes attributed to German broadcasting agency Deutsche Welle.
With Bitcoin, we’re sending a message. We in Zug want to get out in front of future technologies.
The pilot program will see the city council initially limit bitcoin payments to its equivalent to 200 Swiss Francs. The ceiling exists due to the volatility that comes with bitcoin valuations, Müller said. The town is using an exchange to convert bitcoin into Swiss francs, immediately upon receiving the cryptocurrency.
“That’s what the exchange is for, it saves us from losing huge amounts in nanoseconds,” Müller added.
Zug is also known for being one of the world’s lowest tax regimes, making it an economic hub for world trade where commodities are frequently exchanged. About 3% of the world’s petrol, crude oil or refined, is traded through Zug and the neighboring town of Baar. The two towns are already home to some 20 Fintech companies, earning it the notable nickname of a ‘Crypto Valley.’
The pilot program will run until the end of 2016. An analysis and report will follow to gauge the response and potential of accepting the cryptocurrency before a decision is made to continue with bitcoin’s acceptance by the city council.
Featured image from Shutterstock.