Bank of Estonia: EAS playing dangerous games

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Madis Müller

PHOTO: Peeter Langovits / Postimees

The Bank of Estonia sees as dangerous and problematic attempts by Enterprise Estonia (EAS), that oversees Estonia’s e-residency program, to adopt alternative working capital, such as the estcoin, on the community level.

“It would be very dangerous to offer non-residents alternative financial services that would help them bypass international requirements for the prevention of money laundering on the state level,” said Bank of Estonia Vice President Madis Müller.

He said that the central bank has met with the e-residency project manager to explain why it would be problematic to create an alternative state-certified payment tool next to the euro.

“As concerns the problem of availability of banking services for non-resident clients, we should consider whether we could make it easier for honest non-residents to prove their spotless background,” Müller said.

The e-residency program is being led by an international team working under EAS. One of their recent ideas is to create a cryptocurrency called estcoin to be used by members of the e-residency community.

The program’s PR chief Arnaud Castaignet said that the team is working on a new community platform for e-residents, and that the main idea of the estcoin is to render transactions between e-residents’ companies free on that platform.

Head of location-independent investments with the project Adam Rang said that the estcoin should motivate e-residents to trade with each other and Estonians – all Estonian residents. “It would make e-residency as a phenomenon much more valuable,” he said.

Would the estcoin be tied to the euro or how to declare estcoin turnover for the Tax and Customs Board?

E-residency project lead Kaspar Korjus said the team is considering an option where the instrument would be directly tied to the euro.

“We would not be offering an alternative to the euro, but perhaps we could combine some of the advantages of crypto-decentralization with the stability and credibility of ordinary currency and then limit its use to the e-residency community,” Korjus wrote on the project’s blog. The project manager said that banks would have to move money in and out of euro-estcoins while transactions could take place through the blockchain and independently from banks. This would make community-based transactions free all over the world.