Bitcoin Europe EU

Cryptocurrency watchers couldn't miss the news that Estonia was thinking about being the first ever country to do an ICO – the instantly fêted "estcoin".

Indeed, the idea sparked so much interest it was quickly stomped on by ECB president Mario Draghi: "No member state can introduce its own currency; the currency of the eurozone is the euro," he said.

Kaspar Korjus, managing director of e-residency, Republic of Estonia, and the man behind the provocative blogpost was over in London to take part in the GovChain stream of this week's Blockchain Live event.

'You can't buy estcoins – not yet!' announced Korjus as he took to the stage.

Estonia's small population combined with compete lack of legacy infrastructure following decades of Communism has engendered the most innovative e-residency system on the planet. The system, which has been in operation for 17 years, allows Estonian citizens control of their own data. For example, if it turns out some persons or agency has accessed your data without your consent, you can take them to court.

About three years ago, Estonia launched its Global Nation initiative, inviting anyone to become an e-resident (so far, this is approaching 25,000 e-residents in 130 countries). The main driver of e-residency growth is access to business and financial services, so people in places like Turkey, Ukraine or India could start a location-independent company.

This was the thinking behind the national coin. Estcoins could be managed by the Republic of Estonia, but accessed by anyone in the world through its e-Residency programme and launched through an ICO.

"Of course it received a lot of media," said Korjus, "the idea reached 200 million people; many of them quite angry people, including at the Bank of Estonia."

Korjus envisaged the coins potential in a number ways: an EU wide cryptocurrency; or a crypto token, so a kind of digital commodity used to incentivise people to take part in networks, digitally sign things etc.

His favourite use was as a kind of digital bond to allow direct investment (and favourable returns) in Estonia.

"Today, if you want to invest in Estonia, how do you do it?" he asked, "government bonds, buying property, investing in startups?

"Startups can raise funds so why not governments? We could raise billions and the price of the tokens would reach a higher value in 5-10 years. It's a great new source for nations to raise funds," he said.

Taking his theory further into the future, Korjus raised some interesting questions around what could be called decentralised borderless voluntary nationhood. "Imagine we are in 2027," he said, "you have to ask, what would be the source of income of the country if cryptocurrency has eaten up all taxation?

"And what happens if some countries hit scaling mode of 1000% - will the others be left behind? What services will you use from your government if you are a global citizen of 10 other countries?"

Korjus plans to publish more thoughts on this soon. For now Estonia will support ICOs on a smaller scale; Mothership ICO is regulated entity and Change ICO is "a decentralised cryptocurrency bank"; both have raised over €10m so far.

"Blockchain is really just a small part of this," he added. "You need digital identity working in the first place; you need policy innovation; quite extensive network of data acts, digital signature acts. This is what we see missing from most governments - despite all the nice blockchain talk."

On the same stage was Eva Kaili MEP, a firm advocate of fintech innovation. She began with a lapel-grabbing story about being a politician in Greece following the 2008 financial crisis, and the discovery of Bitcoin.

"I was right in the middle of that. We talked about leaving the eurozone, finding another currency. There was even a 'plan B', which involved essentially hacking into everyone's accounts and replacing all their money with Bitcoin.

"Plan B was quite well drafted. Move all accounts into to Bitcoin, establish Bitcoin ATMs – it's scary, and of course it goes against the ethos of Bitcoin and being in control of your own assets. But look what happened in Cyprus; sometimes you are not safe from your own government."

On the subject of legislation moving through the European Parliament, Kaili highlighted fault lines such as geo-blocking in Europe: where online businesses discriminate against consumers based on their nationality or place of residence.

"You have to use a VPN (virtual private network). So we want to make a cross-European market; access to content and value of things has to be the same, which is not the case in the EU.

E-voting is another area under debate, "your votes can be changed if they are on paper; changed as much as 5-10%."

Kaili added that if you want to rebuild infrastructure, including the use of blockchain databases, now you can get funding from the EU to do so.

"FrontierCities (FC), which is about European smart cities driving the future of the internet, is moving to (FC2) which is expected to include blockchain solutions around things like energy infrastructure," she said.

Gibraltar was also present to advertise its "joined up approach to DLT regulation", having 22 years' experience of in the gaming world. AML regulations will be replicated, so banks using DLT don't need a new licence, noted Albert Isola, Minister for Financial Services and Gaming, HM Government of Gibraltar. "This is by no means a light touch," said Isola. "We are not new to the crypto space. Three years ago we started a working group."

In that case, one area to keep a close eye on is ICOs; Gibraltar is touting a "phase 2 listing exchange", which will "filter applicants before granting approval".

Luckily the jurisdiction has onboarded the highly respected cryto-regulation expert Sian Jones, CEO of COINsult. She has been assisting with a regulatory framework which can be expected early next year.