16 October 2019
As skyrocketing bitcoin prices boosts the appeal of cryptocurrencies, Estonia is pursuing plans to launch its own 'estcoin'. Photo: Bloomberg
As skyrocketing bitcoin prices boosts the appeal of cryptocurrencies, Estonia is pursuing plans to launch its own 'estcoin'. Photo: Bloomberg

Estonia may become first nation to issue its own crypto-token

Estonia could become the first country in Europe to launch its own crypto-token, the “estcoin”, under plans outlined by the manager of its e-residency scheme, Reuters reports.

First floating the idea back in August, Kaspar Korjus said in a blog post Tuesday that the estcoin offering is to create a crypto-token for a “digital nation” comprised of the country’s e-residents – a virtual residency for foreigners who open a company there via the web.

“Work on the estcoin is underway,” he said, without without specifying a timetable for the planned launch of the crypto-token.

He said he hopes to provide “more updates in the new year.” 

Korjus outlined the plans for estcoin even though Europe’s top central banker had poured cold water on the idea. 

Mario Draghi, president of the the European Central Bank, warned in September that the only currency of the eurozone was the euro.

In response, Korjus insisted his team has figured out several ways to launch estcoins”without alarming” the ECB.

He stressed that the estcoin would simply be a “token” and not compete with the single currency.

Korjus said estcoins could be issued as three variants: the ‘community estcoin’ rewarding services to the e-resident community; the ‘identity estcoin’ verifying one’s identity online, or the ‘euro estcoin’ as a means of payment pegged to the euro.

While he stated that the crypto-token would not be a parallel currency to rival the euro, the third of his possible designs –“euro estcoin” — envisages that it would work as a parallel means of payment that can remove cross-border banking fees for transactions among e-residents, Reuters noted.

“We would never provide an alternative currency to the euro, but it’s possible that we could combine some of the decentralized advantages of crypto with the stability and trust of fiat currency and then limit its use within the e-resident community,” Korjus said in the blog post.

And the first version, described as a “community estcoin”, would it see openly traded on traditional and cryptocurrency exchanges at a later stage.

Korjus writes in the blog post: “Since the estcoin proposal was published, there was a significant spike in applications for e-Residency and we know many of them signed up because they are interested in investing in ICOs.”

Going forward, they would encourage ICOs launching through the e-Residency program. Guidelines are being drawn up for token-issuers, according to Korjus.

As of now, Estonia’s e-resident community is comprised of the 27,600 people from 151 countries. Citing a Deloitte report, Korjus writes that e-residents have already brought an estimated 14.4 million euro back to the country in the scheme’s first three years and this is predicted to rise to 1.8 billion euro by 2025.

Estonia’s central bank governor Ardo Hansson said the estcoin is not a government initiative and that the central bank had not been consulted.

This year’s skyrocketing surge in the value of bitcoin has triggered fresh attention on crypto-currencies, which to date have all been launched by private companies but are now being considered by some governments and central banks.

In Europe, Netherlands’ central bank created its own cryptocurrency called ‘DNBcoin’ – for internal circulation only – two years ago.

Sweden’s Riksbank, the world’s oldest central bank, has said it may introduce a digital register-based version of the crown currency as the use of cash declines, while Bank of England Governor Mark Carney has cited cryptocurrencies as part of a potential “revolution” in finance.

In addition, Venezuelan President Nicolas Maduro announced earlier this month the launch of the “petro”, a digital currency backed by oil reserves, to shore up his country’s collapsed economy and circumvent US-led financial sanctions.

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