The Marshall Islands is a small cluster of islands in Oceania that most of us have probably never heard of, but it’s making history in the cryptocurrency arena. The country may soon be one of the first to officially adopt a digital coin as legal tender.
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Legal Tender – NOT Like Venezuela’s Petro
Known as the Sovereign (SOV), the coin would become what one source refers to as the “world’s first legal tender cryptocurrency” after a law was passed on Monday through the nation’s parliament that went virtually unopposed by council members.
The country is now partnering with Israel-based startup Neema to issue nearly 25 million SOV units to residents and international investors alike.
Up to this point in time, the country has not had a national currency to its name, and has relied heavily on USD thanks to the Compact of Free Association it shares with the U.S. The country has been using the USD under the agreement, and the U.S. government provides nearly $70 million a year in federal assistance while running a military base on its Kwajalein Atoll.
A Little More Independence For Marshall Islands
Neema co-owner and Israeli entrepreneur Barak Ben-Ezer said:
“Thank you, Marshall Islands, for enabling us to help you become the first country adopting a cryptocurrency as legal tender. As a practical matter, SOV then becomes real money from a legal standpoint. Finally, without capital gains tax, without a securities regulator claiming that the currency is stock. SOV is a sovereign currency like the dollar, the euro and the yen.”
Marshall Islands’ President Hilda Heine also spoke of the event’s significance, saying, “This is an historic moment for our people, finally issuing and using our own currency alongside the USD. It is another step of manifesting our national liberty.”
Hard for Criminals?
Unlike many other cryptocurrencies, SOV does not enable anonymity, and will require holders to identify themselves before engaging in transactions.
Lawmakers had previously expressed their concerns regarding the Marshall Islands becoming a haven for tax fraud and money-laundering activities. Thus, new financial laws had to be built from scratch – a task largely left to Israeli law firm Yigal Arnon & Co., which also represents Neema.
Attorney Yuval Shalhevet mentioned:
“The central bank of the Marshall Islands was involved in the process, but since they don’t have a currency, the rulers of the Marshall Islands had never dealt with monetary regulation. We helped write the law.”
A National ICO?
Possibly revealing the SOV’s true purpose, Marshall Islands officials are hoping the SOV can be used to pay off the country’s growing debt and boost its ailing economy.
If it works, it could start a trend among small nations that mirrors the startup world — create and sell crypto tokens as a means to raise piles of money, quickly. And like the ICO craze, participants would likely face their share of failures and train wrecks amid the success stories.
At this stage, a release date for the SOV currency has not been officially announced, though regulators describe the day as coming “very soon.”
Is the Marshall Islands on the right track? Post your comments below.
Images via Pixabay