Venezuela recently became the first country to launch a cryptocurrency with its oil-backed Petro ICO. President Maduro was so pleased with the results he immediately announced a precious metal-backed Petro Gold.
Other countries are watching the Venezuelan experiment with interest, and it seems that we won’t now have to wait long for other state-backed cryptocurrencies to emerge. Among the most likely next movers, Turkey.
Change of Heart
After last year voicing the usual objections to Bitcoin — that it was a pyramid scheme, that it was a cause of instability — it seems the Turkish government now want to a piece of the crypto action.
Ahmet Kenan Tanrikulu, the deputy chair of the MHP, one of the parties in Turkey’s ruling coalition, has written a report recommending the adoption of a national cryptocurrency to go by the name of Turkcoin.
He suggests that virtual currencies are now so established that fighting the tide was futile. “Opposing those currencies is meaningless,” he said. Whether politicians liked it or not “ … the world is advancing toward a new digital system,” and Turkey “should create its own digital system and currency before it’s too late.”
For Tanrikulu, the demand in Turkey is clear, and though there was a need for regulation and that “the use of those currencies in illegal activities must be prevented,” the government “ … should create and release our own digital currency” to meet that demand.
His report looks likely to be received favourably by his partners in government. Last month the Deputy Prime Minister, Mehmet Simsek, said that “ … we are planning to start our own work on digital currencies”.
Rather than be backed by natural resources like the Petro, the report proposes that the Turkcoin should be “based on companies in the Wealth Fund.” The Turkey Wealth Fund is a sovereign wealth fund owned by the Turkish government and contains national assets like Turkish Airlines, the Istanbul Stock Exchange and the Turkish National Lottery.
The hope is that this would reduce price volatility while offering greater returns to investors than standard government bonds.
As part of this new accommodation with cryptocurrencies, the Turkish Finance Ministry and Capital Markets Board is developing a regulation and tax framework. We can hope that countries keep cryptocurrencies legal, but keeping them free of tax is probably too much to ask for.