The problem of textile waste is enormous. In Switzerland, about 11 kg of clothes are discarded per person annually. Compostable textiles may offer a solution to the significant amount of waste nowadays. However, there are several barriers to developing and disposing of biologically circular textiles, including the fact that the industrial composting of textiles is not yet established. The present paper aims to comprehensively address the development of a biologically circular beanie by integrating a transdisciplinary approach to tackle ecosystem considerations. In order to answer the research questions, a stakeholder analysis, as well as a quantitative and qualitative analysis were carried out. Final results indicate that the project presents both risks and opportunities, particularly in relation to the system, supply chain, production capacity, and customer acceptance. The study implies that regulatory changes are necessary in Switzerland to enable the composting of textiles. Additionally, a product passport could aid in determining the compostability of the beanie. It is also recommended to engage in transdisciplinary collaboration to find a practical solution that satisfies all stakeholders.