Marshall Islands Officially The First country to make Crypto Their Sovereign National Currency
The markets are in free fall lately and the amount of FUD hitting the media is becoming rather depressing and quickly drowns out any good news and progress made in the crypto scene. The beauty of crypto, however, is the low barrier to entry and anyone can get involved. While the larger and more developed countries falter along the lines due to litigation and the powers that be governing the old finance system not willing to give up their position and realise their time of monopoly will soon be over.
Developing nations are becoming front runners
Third world and developing nations are beginning to take bold leaps which could see them become innovators in digital finance while the developing worlds slow and rigid decision-making processes hold them back.
In recent weeks I published a few posts along these lines with Zimbabwe launching cryptocurrency ATMs and South Africa following just a week later. These are by no means small feats but pails in comparison to the bold move the tiny Island of Marshall has made.
Cryptocurrency now officially legal tender
The Marshall Islands made its own cryptocurrency, doing away with the US dollar. The government has signed the change into law, making the “sovereign” its new official cryptocurrency, as spotted by CNBC Africa cryptocurrency trader host Ran Neuner on Twitter yesterday.
The bill was signed into effect on March 1st, but the news is making waves again this week. The Marshall Islands’ population is 53,066, so the change doesn’t affect many, but it is significant for citizens of the islands because banks and credit card companies will need to begin accepting it. With the recent change, US dollars are still likely to be accepted on the Marshall Islands — the sovereign will just be considered the nation’s official legal tender.
In February, top officials from the Marshall Islands confirmed that the Pacific republic would issue its own cryptocurrency to be circulated as legal tender. The digital coin also received approval from the country’s parliament.
“As a country, we reserve the right to issue a currency in whatever form it is, whether in digital or fiat form,” said David Paul, minister-in-assistance to the president of the Marshall Islands, to Reuters at the time.
The sovereign (SOV) will be launched through an initial coin offering and supply is supposed to be capped at 24 million tokens, as a precaution against inflation.
Link to Tweet
Ran NeuNer CNBC Cryptotrader host has also been following the story closely
If a sovereign nation, not under sanctions, part of the UN has a legal tender in their country, the banks must support it. Here are some docs showing tha the Marshall Islands meets all criteria and has signed a bill in parliament creating the world's first sovereign cryptocurrency
A monumental moment in cryptocurrency
Just as on the 22nd we celebrate bitcoin Pizza day this annoucnemnt could soon be added to the histroy books as a turning point for the industry. The Marshall Islands is a United Nations member and a sovereign state, creating a larger impact for banks globally. If they are able to prove that cryptocurrency is a viable national tender it could have widespread implications for things like trade agreements, tourism and much more.
Reasons for the leap into crypto
The timing of the R.M.I.’s decision to issue a cryptocurrency is likely linked to budgetary concerns. The U.S. currently sends the R.M.I. $60 million in foreign aid every year, but in 2023, that figure will drop to $30 million. According to the R.M.I. media release, the nation’s entire budget is $100 million, so it stands to lose nearly a third of that budget just five years from now. To combat the turmoil the drop in aid is likely to cause, the island nation plans to place 50 percent of what it earns via its initial coin offerings into a national trust fund.
The Marshall Islands is launching Sovereign, the first cryptocurrency issued as legal tender by a nation, in the hopes of combatting impending budget cuts. On February 26, the Republic of the Marshall Islands (R.M.I.) passed a law approving the launch of Sovereign (SOV), the first cryptocurrency issued as legal tender by a sovereign nation.
“This is a historic moment for our people, finally issuing and using our own currency, alongside the USD. It is another step of manifesting our national liberty,” said R.M.I. President Hilda C. Heine in a media release.
The R.M.I. plans to distribute SOV later in 2018 via an initial coin offering (ICO). David Paul, minister-in-assistance to President Heine, told Reuters the nation will cap SOV supply at 24 million tokens, with that number chosen in reference to the R.M.I.’s 24 municipalities. He noted that a presale for those initial coin offerings will begin “soon.”
Response to the news
“SOV will mark a new era for the cryptocurrency,” said Neema CEO Barak Ben-Ezer in the media release.
“SOV is about getting rid of the excuses why not to shift to crypto — it’s real money, and it provides the golden path between an open ledger and total anonymity. It gives users the power to decide when and what to disclose,” he added.
Reduction in foreing aid
The timing of the R.M.I.’s decision to issue a cryptocurrency is likely linked to budgetary concerns. The U.S. currently sends the R.M.I. $60 million in foreign aid every year, but in 2023, that figure will drop to $30 million. According to the R.M.I. media release, the nation’s entire budget is $100 million, so it stands to lose nearly a third of that budget just five years from now.
To combat the turmoil the drop in aid is likely to cause, the island nation plans to place 50 percent of what it earns via its initial coin offerings into a national trust fund.
How will the SOV nationalised cryptocurrency work
The R.M.I. will split the rest of the money across three areas. Between 1946 and 1958, the U.S. used the R.M.I. as a nuclear testing site, so 20 percent of the remaining funds will go toward providing citizens affected by those nuclear tests with healthcare and support.
The nation will also give 20 percent of the funds directly to R.M.I. resident-citizens in the form of SOV. Those citizens will then have the opportunity to use the crypto as a form of exchange just like they would “regular money.”
The R.M.I. will place the final 10 percent into a Green Climate Fund. The nation is highly susceptible to the negative impacts of climate change, and this fund will help it transition to clean energy and address issues like overfishing.
Who will be creating the first legal tender cryptocurrency
Now that you have some context into why the country of Marshall has opted for cryptocurrency you have to ask yourself do they have blockchain developers on hand and the answer is yes. Neema, an Israeli startup, is developing the technology to support SOV and will oversee both the presale and the coin offerings.
Not the first country to try but the first country to suceed
Back in February, Venezuela launched its own oil-backed cryptocurrency called the petro, but it hasn’t completely removed the fiat bolivar from circulation. Venezuela is also under US sanctions, and President Donald Trump actually issued an executive order banning anyone in the US or US territories from investing in petro
Of the other nations that have recently considered cryptocurrencies — Iran, Russia, and Israel — none have committed as much as the R.M.I. towards the initial venture.
What I make of this first nationalised cryptocurrency
Crypto enthusiasts and crypto purists have been calling this for ages and are bullish on the practicality of cryptocurrency so having a real-world case study we can follow is going to make a huge case for them or against the mass adoption fo cryptocurrency.
The citizens of Marshall may be on the leading edge of financial technology and will be adopting risk that could benefit the entire planet in the future. We will now find out if a cryptocurrency can function equally or better than fiat and if peer to peer trading is truly a superior method of monetary transactions.
Either way, it's going to be an interesting experiment and one that we should all follow closely and support as it has huge real-world ramifications should it become a success.
Have your say
What do you think of The Marshall Islands signing cryptocurrency into law? A brave move? Will it legitimize the use of cryptocurrency and prove to be the case study that gets the ball rolling?
Drop me a comment like its hot!
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