Crypto Petro, Rial, Ruble and Shekel Currencies are on the Horizon, But What about US?
Various Countries Are Creating State-Sanctioned Cryptocurrencies But Not the US
The US seems no closer to coming up with a ‘FedCoin’ than it was when the idea became first floated. However, other nations are actively pursuing a state-sanctioned cryptocoin. In the last month, Venezuela and Iran have accelerated their plans on a national cryptocoin. Israel and Russia have also reportedly considered a crypto version of their currencies for about a year. Sweden is also not far behind.
Rogue Nations are in Love with the Idea of Crypto
In December, an Israel finance official said that the idea of sending a piece of digital code instead of giving a piece of paper was fascinating. A crypto coin sponsored by a central bank offers governments various potential benefits. For instance, it will make it more efficient to conduct monetary policy.
In theory, cryptocoin backed by the state would not be much different from their fiat currency. Reason being, both would be supported by the government that issues them, especially if they peg to the country’s fiat currency.
However, the countries working on crypto have a more specific and pressing need for it. For Venezuela, which has skyrocketing inflation, sanctions by the US and a political crisis, the Petro, released in December is an attempt to create a stable measure of value linked to its oil reserves. However, the cryptocoin has faced great scepticism inside and outside the nation. Thus, the country devalued their fiat currency, which created a new ‘sovereign bolivar’ that’s pegged to the petro instead of the other way.
On Monday, the President of Venezuela ordered that banks adopt the petro as their unit of account. All financial data has become denominated in the petro and fiat currency. The country is considering modifying the constitution to create a central cryptocoin bank.
In the same way, Iran is working on crypto as a way to evade US sanctions against it. The sanctions have to decline of its fiat currency, amongst other economic problems. A report in its English-language paper says a draft document that governs crypto was recently finalized and will be considered this September.
It is Not Just Rogue Nations Pursuing Crypto
Crypt purists take comfort in the idea that it's not just rogue nations that are taking advantage of crypto. Israel is considering a crypto version of their shekel to reduce tax evasion and fraud. A country where the ‘shadow’ market accounts for nearly a fifth of all the economic activity.
Russia is also working to make its exclusive crypto version too. Moscow intends to ban all other crypto coins once their crypto rubble starts circulating. The report in RT says that the currency would not necessarily be private. However, it would be released and controlled by the state. It would make it possible to circulate digital money in the digital economy. As an example of state control, Russia would apply a tax of 13 per cent when users convert their crypto to fiat.