The Swiss municipality of Chiasso has decided to accept tax payments in bitcoin starting January 2018.
The municipality plans to test the method by initially restricting payments to values up to CHF250 (around $65).
Chiasso mayor Bruno Arrigoni said: “Chiasso is recognised internationally as an epicentre of a growing technological and economic growth for both the canton and in Switzerland.”
The move is seen as Chiasso’s bid to rival Zug as the dominant Swiss center for cryptocurrency innovation.
Last year, Zug announced that it would accept payments of up to CHF200 in bitcoin for council services. Since July 2016, the municipality has received more than 40 bitcoin payments.
Created in 2008, bitcoin is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.