The microstate of Andorra is looking to take action related to crypto and central bank digital currency (CBDC) with a legislative proposal that could eventually see the country issue its own token – and despite an initial setback, could pushing for crypto-friendly policies in the near future.
The population of the Principality of Andorra is just under 78,000, but it has its own parliament and is technically independent of Spain and France, the nations between which it is sandwiched. And the Andorran government has been keen to adopt a number of pro-crypto policies in recent months.
Last year, it took its first steps to regulate crypto operators that have a base in the country. And in April, according to the Diari Andorra newspaper, the ruling party, the Democrats of Andorra, presented a proposal to “allow the state to create its own token”.
The bill made mention of what its authors called a “programmable digital sovereign currency” that could “serve as a means of payment” and would be issued by the “central bank or a sovereign governmental authority”. It would also be “intended for use by the general public” and could be used to make government bond issues.
The proposal makes mention of “blockchain technology” and, perhaps more pertinently, also seeks to grant private companies permission to launch their own digital tokens – crypto-assets except in name – under certain conditions.
The proposal has been submitted for public consultation. But last month, the same newspaper reported, its architects hit the pause button on the plan. Instead of completely accepting it, politicians have instead decided to approve “tokenization” in “closed ecosystems”, such as “ski resorts”. As such, the coins could not be publicly traded or listed on an exchange – and would have more in common with “Disney dollars” than with bitcoin (BTC).
The revised bill, now the Digital Assets Act, states that crypto-assets “cannot be [used] as legal tender in the Principality” and seems to have been greatly diluted at the request of the Andorran Financial Authority (AFA), the main financial regulator.
The AFA claimed that it “needs more resources to be able to perform the necessary checks” on crypto-assets.
However, the Bill supporters will be back for a second bite of the cherry. The terms of the law oblige architects to come back with a “new invoice” before the expiry of a period of 15 months.
And this new proposal will contain details on the “dissemination of digital assets that can be considered as financial instruments”. This apparently opens the door for a crypto-asset to achieve legal tender status, à la El Salvador.
The outlet noted that the delay would provide “wiggle room” for politicians who wanted to follow how European Union regulators oversee the crypto sector and “so they could follow in their footsteps.”
But some in the private sector would rather not wait – and have offered ambitious plans to follow the lead of other more maverick nations.
A more recent proposal from the Andorra-based crypto firm 21 million pleaded for the adoption of the CTB in the principality.
The company pointed out that the adoption of bitcoin could allow the Treasury to “open up many economic activities”, as this “would allow Andorran banks and companies to carry out transactions outside” of banking messaging networks such as FAST. Instead, the parties could “settle transactions on the Bitcoin blockchain, while allowing Andorran businesses and citizens to conduct daily transactions on the Lightning Network.”
The firm explained that bitcoin would “provide additional resilience to traditional channels while preserving Andorra’s financial independence”.
The company’s CEO urged politicians to act quickly, explaining:
“By attracting innovative entrepreneurs who want to enjoy a quality European living environment in a secure environment, the country could climb even further towards the most prosperous nations on the planet, while remaining in control of its future, and c is so much better!
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