The small Baltic nation of Estonia has backed down on its plan to create a national cryptocurrency after drawing heat from Italian economist and President of the European Central Bank Mario Draghi, as well as local banking authorities. Now, the Estcoin will simply be used as an incentive for e-residents.
Estonia’s cryptocurrency project, Estcoin, will “definitely not be a national ‘cryptocurrency,” after receiving pressure from banking authorities. According to Estonia’s head of IT strategy, Siim Sikkut, the digital token will now merely be offered as an incentive to foreigners using Estonia’s electronic identification to sign documents and set up companies remotely.
Estonia originally planned on pegging its national cryptocurrency to the euro — the official currency of the European Union — as well as offering them to all citizens within the Baltic country.
‘The currency of the eurozone is the euro’
As noted by Bloomberg, Estonia is one of the most technologically advanced states in its region and has been planning on issuing its own state cryptocurrency — the Estcoin — for quite some time. European Central Bank President Mario Draghi, however, has been critical of the idea, stating that only the euro may be used in the small country. As dictated by Draghi in September of last year:
No member state can introduce its own currency; the currency of the eurozone is the euro.
Draghi was backed up by Ardo Hansson, central bank governor, who claimed official reports regarding Estcoin were “misleading.”
‘We’re not building a new currency’
The pressure from the European banking authorities has effectively shut down any hopes of Estcoin becoming a legitimately new form of legal tender in Estonia. Stated Sikkut:
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’re not building a new currency.
The significant scale-back of the Estcoin plan has also been confirmed by its author, Kaspar Korjus, who confirmed to Bloomberg that it “would definitely not be a national ‘cryptocurrency.”