Estonia’s e-Residency program managing director, Kaspar Korjus, has outlined a detailed plan to introduce the first government-backed cryptocurrency, called “estcoin.” The proposal to institute a national cryptocurrency was first made in August and, despite criticism from the European Central Bank, Korjus went ahead and described three use cases in a blog post.
“No member state can introduce its own currency; the currency of the euro zone is the euro,” said European Central Bank president Mario Draghi.
Korjus argues the virtual currency could be used as a community token “to support the objective of growing our new digital nation by incentivizing more people around the world to apply for and make greater use of e-Residency.” He said estcoin would “allow members of the e-Residency society to do such things as digitally sign documents or log into services safely and securely” and a euro estcoin “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.”
If supported by the government, Estcoin would be the first state-managed cryptocurrency, but the Estonian government and Estonia’s central bank were not consulted.
“Change is coming,” wrote Korjus. “Crypto tokenization will alter the nature of our world whether we act or not, so we must ensure we are taking a lead and that is already happening in Estonia.”
Venezuela’s Nicholas Maduro announced earlier in December that the country launched its own digital currency, called “the petro.”
Regulators say cryptocurrency encourages fraud, manipulation and terrorist financing, and have also expressed concern over its disruption of the banking and financial industries. While some countries are looking into ways of regulating cryptocurrency and could soon propose legislation, others consider it illegal and have banned it.
In the US, the IRS argues cryptocurrency should be “treated as property for tax purposes.”