Lugano's crypto partner is the big beneficiary of the uncertainty surrounding Paxos and Binance's stablecoin. At the same time, the people of Ticino are making history in the field of digital bonds.

There should be some relief in the crypto hub of Lugano. Tether, the official crypto partner of the city in the Canton of Ticino is currently the big winner amidst the uncertainties surrounding the Binance USD (BUSD) stablecoin. Meanwhile, many crypto investors have fled BUSD, a stablecoin issued by Paxos Trust of the namesake crypto exchange Binance, which is pegged 1:1 to the dollar.

In the US, after the New York Department of Financial Services ordered blockchain company Paxos to stop issuing the Binance USD (BUSD) stablecoin earlier this week, its market capitalization plummeted. Crypto investors have sought safety in Tether's stablecoin USDT, at least temporarily.

Flight Into Tether's USDT

Paxos coming under the gaze of the Securities and Exchange Commission (SEC) may have exacerbated outflows of funds. The largest stablecoin by circulation, USDT, gained more than $1 billion in market capitalization since Monday to nearly $69.7 billion, its highest since June 2022.

Still, Tether is likely to remain controversial. The stablecoin issuer has long been embroiled in controversy over the status of its reserves, which are used to cover the supply of the USDT stablecoin. The company has consistently denied allegations its USDT in circulation is not 100 percent covered and has submitted quarterly reports from accounting firms supporting their contention.

Another Milestone

Tether tensions aside, Lugano is making strides on its way to becoming one of Europe's leading blockchain centers. Earlier this year, Lugano broke new ground in debt raising by issuing its first blockchain-based bond with Zuercher Kantonalbank (ZKB) as sole lead manager, as also reported by finews.com.

Following its issuance, and thanks to its dual listing on the SDX Trading digital exchange and the SIX Swiss Exchange, the bond is the first native digital asset to be accepted by the Swiss National Bank (SNB) as collateral for repos. According to a statement on Wednesday, this is an important milestone in the introduction of digital bonds and another world first.