The Czech Republic, most notably the country’s central bank has been turning sour against cryptocurrencies for a while now. However, they showed their true colors when a local crypto company, named Paralelní Polis released a new crypto token which they referred to as a coin in their whitepaper as well as their marketing campaigns.
According to a report from the central bank, Paralelní Polis will be receiving a serious fine for misleading investors in believing their new product is an actual coin. As many would be aware, coins are something that is exclusive for central banks to issue, and any private venture in this industry would immediately warrant an intervention, similar to what we see the central bank do right now.
The representatives of Paralelní Polis have commented on the issue saying that the coin will be referred to as a coin and there’s no law in the country that prevents them from using the term.
This is partially true, as the product being released by Paralelní Polis is essentially a security token, meaning it always changes price, but on a level which other cryptos don’t necessarily resemble.
For example, the silver coins that Paralelní Polis mints are pegged to BTC. Every silver coin is worth 0.1 BTC, meaning that its price constantly shifts alongside the market, thus making it a relatively safe investment for locals.
Why the sudden aversion
The decision to place a fine on Paralelní Polis is definitely not a surprise for most who have been paying attention to the Czech crypto market. The central bank has been very active in restricting the industry as much as possible, but not on a level that prevents these coins from being in circulation.
One primary argument that has been heard in the past was that the minting of currencies, translated into printing money is a privilege that only the central bank has access to. The coins that are currently in the market, are mostly developed oversees and funneled into the market, meaning that they follow many different rules.
However, the silver coins developed by Paralelní Polis are local produce, meaning that local laws apply. Therefore the central bank drew the connections between these coins and their own issued currencies and counted it as a violation.
Same issues with other financial markets
This is not the first time that the Czech central bank had to double down on some of its policies. The country has seen several financial companies somehow speed up the customer service process by introducing local tokens that always had a fixed price. Something similar to a gift card for deposits on various aspects.
Furthermore, thanks to the Czech Republic’s membership in the European Union, local financial companies had to let go of trader benefits and various other promotions. One such occurrence was when the XM no deposit bonus was removed from the company’s Czech branch, thus tanking the acquisition of new customers.
This is the same future that crypto companies can expect in the future, especially those that want to create local tokens. It’s not necessarily required to be a crypto exchange to issue your own currency nowadays, almost everybody can create their own versions on things such as ERC-20, but them being classified as actual coins is something completely bizarre.
Will the Czech Republic become a barren wasteland of cryptos?
It’s very unlikely that this small mishap is going to seriously affect Czech crypto companies in the future. It’s not like the central bank is banning the silver coins, it’s simply issuing a fine to the company that made it.
Although Paralelní Polis refuses to back down and change the name, it’s likely that any future projects will simply find a way around this predicament.
As for the popularity of cryptos, considering how popular silver coins are in Prague, it’s likely that any future project will find a solid foothold if it decides to enter the Czech market.