Cryptocurrencies are usually considered by central banks as a threat considering the nature of its underlying technology that can get rid of third parties that confirm transactions. However, there are countries that have welcomed cryptos such as Venezuela. Venezuela created its own digital currency that is backed by oil.
In fact, Venezuela has been one of the countries that have supported crypto activities. There was even a time when Venezuelan President Maduro called for young individuals to mine. That’s before the country decided to ban the importation of crypto hardware.
In Europe, Estonia is another state that had plans of creating their very own cryptocurrency. The country announced in August last year that it had plans to issue a state-backed digital currency that is going to be called Estcoin. It would’ve been the very first state-backed ICO. The Estcoin would’ve been pegged to the euro hoping to create a stable coin.
Mandatory ECB Rules
However, there seems to be a problem. Though the move is such a forward-thinking and ambitious project on the part of Estonia, authorities seemed to have lost track of their Eurozone status. It means that they are now subject to the ECB rules when it comes to monetary policies. And consequently, the country received criticisms from ECB President Mario Draghi as well as other banking authorities.
On June 1, a report has been published that the country is already dropping all of its plans that relate to the ICO. Draghi mentioned that Euro “can be the only currency” for the country.
For E-Residents Only?
Estonia is considered a country that is technologically advanced. It is among countries such as Norway and Sweden. According to Siim Sikkut who is the head of Estonia’s IT strategy, he mentioned that the plan for Estcoin is that it will be used as an incentive for e-residents or foreigners who are moving to the country in order to set up companies.
He said that “We agreed in discussions with politicians that Estcoin will proceed as a means for transactions inside the e-resident community. Other options aren’t on the table. We are not building a new currency”.
Kaspar Korjus who was the one who is responsible for the Estcoin’s white paper also echoed the same sentiments by Sikkut. He mentioned that the digital token “would definitely not be a national cryptocurrency”.
Countries Adopting Crypto?
There are a growing number of countries that are looking to create a state-backed crypto. For instance, aside from Venezuela that has created a cryptocurrency in order to circumvent the existing economic policies against their country, you also have the Swiss government that is already taking a closer look at the possibility of having their own state-backed digital currency.
The Bank of England also released a paper that pertains to government-backed digital currencies. The paper even discussed the possibility of having a “Central Bank Digital Currency”.
Considering the crackdown being made by regulators against cryptocurrencies, it is a breath of fresh air to encounter countries that are considering the use of blockchain technology to their advantage. Could this actually be the trend in the near future?