Marshall Islands will produce cryptocoin that will be legal tender

Little Marshall Islands is creating its own digital currency in order to raise cash, pay its bills, and help boost its economy. It will be the first country to recognize any cryptocurrency as legal tender.

The country passed a law on February 26th to create the "Sovereign" or SOV. The bill is called The Sovereign Currency Act of 2018.

The Sovereign will have the same status as the U.S. dollar which also is legal as a form of payment. While Venezuela was the first country to launch its own cryptocurrency, the SOV will be the first to be recognized as legal tender and is in effect backed by the government. The Venezuelan coin is called the Petro (PTR). 82.4 million of the coins were listed last month for pre-sale. The coin is meant to help overcome the effects of the US blockade and help the economy.

The Marshall Islands

The Republic of the Marshall Islands is located near the equator in the Pacific Ocean. It is a little west of the International Date Line. It is part of the larger island group of Micronesia. The country has a little over 53,000 inhabitants in 2011. They are spread out over 29 coral atolls consisting of 1,156 individual islands and islets.

The purpose of the Sovereign

The bill reads: "The purpose of this Act is to declare and issue a digital decentralized currency based on blockchain technology as legal tender of the Republic of Marshall Islands." The bill adds that the coin will be issued by the Ministry of FInance and will be introduced by an initial coin offering (ICO).

Hilda Heine, president said: "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."

Israeli firm to develop technology for the Sovereign

Neema, an Israeli startup firm that has an app that facilitates international money transfers, will develop the technology underlying the Sovereign using a protocol called "Yokwe" a term in the Marshallese language. The protocol should mitigate financial crime concerns. It does this by linking accounts to government-verified identities, according to CTech, an Israeli technology news site.

Barak Ben-Ezer, CEO and founder of Neema and Roye Rahav, also involved with the project said:"We all dreamt of this day, when the first country goes crypto. Once we achieve success, the SOV will bring us several steps closer to a free, more liberated world. In which money flows peer to peer, instantly and cost effectively, and no ruler can arbitrarily print more of it."

Proceeds of ICO to help government finances

Soon payments by the US to the government of $30 million a year to compensate islanders for the use of the islands as a nuclear testing site in the 1940's and 50's will end. Reports indicate that 70 percent of the money raised will go to offset gaps in the budget caused when the reparation payments cease. The rest will be used for sustainability projects and what is left will be distributed to Marshallese citizens.