Venezuela Snowball Effect? Petro Just Got More Followers

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Sead Fadilpašić

Journalist

Sead Fadilpašić

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Sead specializes in writing factual and informative articles to help the public navigate the ever-changing world of crypto. He has extensive experience in the blockchain industry, where he has served...

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June 25, 2023

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Ever since Venezuela announced their national cryptocurrency, the petro, all eyes have been on them, waiting for their next step. But the news that they supposedly raised USD 735 million in the first day of their pre-sale seems to have prompted other governments to consider doing the same.

This time, the news comes from the east – Turkish lawmaker Ahmet Kenan Tanrikulu, the deputy chair of Turkey’s Nationalist Movement Party and the country’s former Industry Minister, is about to propose a state-backed cryptocurrency called Turkcoin, says Al-Monitor, a news outlet focusing on the Middle East.

Apparently, Turkcoin would aim to tokenize asset-backed securities for the issuance, though there is no mention of technical specifics. Tanrikulu points out that crypto is not regulated in Turkey, stating in his report, “The Turkish Penal Code contains the provision that no one can be punished […] for acts that are not overtly considered a crime in the law. Based on this provision, the use of cryptocurrencies can be considered legal since our law contains no prohibition. […] Many enterprises accept payment in cryptocurrencies, and the number of customers using those currencies is rapidly increasing.”

Turkey is not the only country to consider a government crypto in its part of the world. Its eastern neighbor Iran had the same idea: their Information and Communications Technology Minister MJ Azari Jahromi announced the country’s plans on Twitter on Wednesday, apparently following a meeting with the Iranian central bank’s board of directors.

While no other details have been published on this matter, if this cryptocurrency’s creation is entrusted to the Central Bank of Iran, the project would represent the latest effort to create a state-backed digital currency by an institution of that kind. They wouldn’t be the first to explore this area – other central banks, notably those from the UK, Singapore and China have already given thought to this path.

Last November, Abolhassan Firouzabadi, secretary of Iran’s High Council of Cyberspace, was reported by financialtribune.com as saying, “We [at the HCC] welcome Bitcoin, but we must have regulations for Bitcoin and any other digital currency. Studies are necessary for considering a new currency.”

He also points out that even though the Central Bank of Iran has yet to devise definitive regulations for Bitcoin and similar currencies, “many in Iran are dealing with Bitcoin, be it purchasing, selling or mining it, and even dealing with it in exchange shops, creating content and establishing startups.”

This is hardly without precedent: even without Venezuela’s petro, Russia has also shown interest in developing the so-called CryptoRuble. However, experts agree that the currency “may not be for public use” – as Nikita Kulikov, member of the council for digital economy under the Duma, said, “I see the cryptorouble only being applied at the inter-state or inter-bank level.”

But when one of the basic rules of cryptocurrency is decentralization, what does a centralized coin mean for the industry? In some cases, it could benefit citizens, since it could force a new level of transparency on governments, but it may not be so good for the self-regulating crypto industry.

Meanwhile, Chris Burniske, a partner at Placeholder, a New York venture firm that specializes in cryptoassets, tweeted: “The trend of nation states digitizing their fiat using cryptographic primitives is inevitable, but I don’t consider them part of this new asset class.”

According to him, this technology is being used to provision an old asset.

“Instead of lumping this under the cryptocurrency umbrella, I propose using #cryptofiat.<…> Fiat is fiat, no matter the form, and certainly doesn’t deserve to stand among the ranks of cryptocurrencies like bitcoin, monero, zcash, decred, and more,” Burniske stressed.