Korjus proposes an ICO as a government fundraiser \u2014 so what we have is a different sort of government bond issue. The key point is that it probably<\/i> wouldn\u2019t technically be debt under EU rules on how much bond debt member countries are allowed to have.<\/p>\n
People are putting hundreds of millions of dollars into underspecified ICO proposals that would go nowhere if they were conventional security offerings. So the value proposition for an Estcoin ICO would be \u201cwe\u2019re a sovereign country with a decent credit rating for our size.\u201d Which is pretty attractive, especially compared to some of what’s put forward<\/a> as an ICO.<\/p>\n Estcoin is not quite, but almost, a proposal for a parallel currency. Korjus says \u201cin time” it might<\/em> become one, be good for government debts and so on, and even “eventually function as a viable currency used globally,” which I’m sure would please the country running it.<\/p>\n (Assuming a blockchain with sufficient transaction capacity can be found, or started, to run it on. Ethereum was the suggested platform for an earlier version<\/a> of the idea, but that chain’s full more and more often. At least it’ll be more blockchainy than Estonia’s official Blockchain\u2122 platform, KSI Blockchain<\/a>, which doesn’t actually have a blockchain in it.)<\/p>\n EU institutions in general will be less than impressed. When Silvio Berlusconi proposed a parallel currency for Italy (though not a crypto) a week before, the European Commission shot it down, bluntly stating<\/a> that there was one legal currency in the Eurozone, with \u201cno exceptions to this rule.\u201d Berlusconi said<\/a> his proposal could work fully inside EU laws, but it\u2019s not clear anyone outside Italy agrees.<\/p>\n European Central Bank President Mario Draghi similarly<\/a> dismissed<\/a> the notion of Estcoin as currency at his regular press conference today: I won\u2019t comment on the Italian intention but I will comment on the Estonian decision: no member state can introduce its own currency. The currency of the eurozone is the euro.<\/p><\/blockquote>\n The problems won’t just be legal \u2014 Berlusconi\u2019s proposal led to a sell-off<\/a> of Italy’s bonds, even though his party<\/a> is presently in opposition, so the markets are unlikely to react well either.<\/p>\n If this idea does go anywhere \u2014 and Korjus is still keen<\/a>\u00a0\u2014 I expect they\u2019ll try to frame it as a bond issue and stress that it\u2019s not a currency and won\u2019t be a currency, definitely, for sure.<\/p>\n It\u2019s not clear what would happen when the ICO bubble ends and the tokens lose value for speculators \u2014 if there would be any blowback on Estonia\u2019s reputation, either with e-residents or bond markets. Or if they’d treat it as easy come, easy go.<\/p>\n
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