The Republic of the Marshall Islands, an island nation in the central Pacific Ocean, is expected to become the first sovereign nation to issue cryptocurrency as legal and official money, according to the International Business Times.
The parliament of this group of more than 1,200 islands, whose population is about 50,000, passed a law on Wednesday declaring its digital currency, called Sovereign (SOV), as its new official currency. It is expected to come into circulation later this year.
Neema, an Israel-based start-up that facilitates international money transfers via an app, will develop the technology behind the new cryptocurrency.
“SOV is a big deal because, until now, all cryptos were in regulatory limbo…SOV has the benefits of cryptocurrency and the legal and regulatory framework that covers sovereign currencies. You can use it without worrying about capital gains and even the ICO may be like selling any currency – Euro, Yen, etc.,” Barak Ben-Ezer, co-founder of Neema, told Bitcoin Magazine.
The Marshall Islands Government will hold an ICO, the proceeds of which will be used to fill its coffers before the end of US dollar payments.
“SOV is the promising starting point for the adoption of cryptocurrencies by sovereign nations,” said Peter Dittus, former secretary general of the Bank of International Settlements and Neema’s senior economic advisor. “The Yokwe protocol provides a promising balance between transparency and privacy and we’re excited to develop it further. It’s state of the art technology, put to good use, with the right values in mind and a clear purpose.”
“This is a historic moment for our people, finally issuing and using our own currency, alongside the USD,” said RMI President Hilda C. Heine. “It is another step of manifesting our national liberty. Allocating SOV units directly to the citizens will circulate the currency and distribute wealth efficiently to our people. In addition, The RMI will invest the revenues to support its climate change efforts, green energy, healthcare for those still affected by the U.S. nuclear tests and education.”
The search for monetary independence
The Marshall Islands were the scene of clashes between Americans and Japanese during the Second World War. Since then, they have long been under the tutelage of the United States (1947 officially, after a landing in 1944). This guardship became a free association in 1986, under the 1979 agreements. Independence was obtained in 1990. Since then, the Marshall Islands have been using the US dollar as its currency.
The primary sources of revenue for the republic are substantial US subsidies under a free association contract and the lease of land for US missile testing on Kwajalein, a coral formation in the western chain of the Republic of Korea. Marshall Islands.
This initiative comes at a time when financial regulators around the world are becoming increasingly hostile to digital currencies. The US Securities and Exchange Commission and the European Central Bank have issued several warnings about the dangers of investing in cryptocurrencies.
Earlier this year, Venezuela launched a cryptocurrency called Petro, claiming it was the world’s first sovereign cryptocurrency.