Estonia Shelves Plans For National Cryptocurrency

Estonia has shelved plans to develop its own national cryptocurrency after the idea prompted criticism by banking authorities and Mario Draghi, the Italian economist and president of the European Central Bank.

Bloomberg, citing Siim Sikkut, an official who heads up the information technology strategy for the Eastern European country, reported it had planned to peg the cryptocurrency to the euro or would offer the digital tokens to all of its citizens — but instead they will be offered to foreigners who use its electronic identification system to sign documents and set up companies remotely, otherwise known as e-residents. “We agreed in discussions with politicians that Estcoin will proceed as a means for transactions inside the e-resident community,” Sikkut said. “Other options aren’t on the table. We’re not building a new currency,” the official told Bloomberg.  According to the report, there are more than 35,000 identification cards issued for people outside the country, with most of them going to residents of Finland, Russia, and Ukraine. The e-residency program was launched in 2014.

Estonia, which is among the most tech-friendly countries in eastern Europe, had been a leader in potentially issuing a national cryptocurrency, but the plan was criticized by Draghi earlier in the year when he said the euro can be the only currency in the country. “No member state can introduce its own currency; the currency of the eurozone is the euro,” Draghi said back in September, according to the report.

The termination of plans to create a national cryptocurrency comes amid a money laundering scandal in which the police said late last month that more than $13 billion (or about €11 billion) was laundered through banks in Estonia between 2012 and 2016. Much of the money was reportedly laundered through bank accounts belonging to non-residents, Reuters reported. “In 2012, more than €7.3 billion in securities from Russia were processed through the Estonian financial system. The proceeds were transferred to dozens of jurisdictions and thousands of companies for various goods and services,” Estonia’s Financial Intelligence Unit (FIU) wrote in its annual report. Police in Estonia said more money laundering could take place this year with the closure of Russian banks.