Partnering with Israeli finch startup Neema, The Republic of the Marshall Islands (RMI) — a country located in the Pacific Ocean with a population of only 50,000 — is set to become the first sovereign nation to issue a cryptocurrency that will be legal tender.
As reported by the Telegraph, President of the Marshall Islands, Dr. Hilda C. Heine describes the move as follows:
“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.”
The new currency is called “Sovereign” or “SOV.” It will be distributed to the public via an Initial Coin Offering (ICO) later this year, with every resident of the Marshall Islands to receive a free allocation — soon after, the government will allow global investors to participate. The SOV will circulate as legal tender in the country alongside the country’s current local currency, the U.S. dollar.
This move is part of a broader “E-Conomy vision” to create a society that not only uses blockchain technologies for the SOV and for securely record biometric IDs: Going ahead, the government hopes blockchain will transform licensing, ownership, and the voting system in the Marshall Islands, amongst other things.
President Heine describes the vision as follows: “The RMI will invest the revenues to support its climate change efforts, green energy, healthcare for those still affected by the US nuclear tests, and education.” In fact, 10% of the proceeds from the ICO will be directed toward a Green Climate Fund, according to David Paul, Minister-in-Assistance to the President and Environment Minister of the RMI.
In contrast to Bitcoin and other decentralized cryptocurrecies, the SOV is based on the Yokwe protocol, which requires users to identify via the blockchain — taking away the pseudo-anonymity that other cryptocurrencies offer. This isn’t necessarily a surprising move as the RMI is creating this digital currency for its citizens and wants it to be transparent — don’t forget, the SOV is a government funded and run operation.
As noted above, Neema is the Israeil fintech startup the RMI is teaming up with to issue the digital currency. Peter Dittus, Neema’s senior economic advisor, describes the decision to utilize the Yokwe protocol as follows:
“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.”
Earlier this year, the Maduro government in Venezuela launched a digital currency called the Petro, claiming it was the world’s first sovereign cryptocurrency. The SOV statement notes that, contrary to the Petro, the SOV will actually be legal tender of the country. And further, the SOV price will be determined by the market — not like the Petro whose price is pegged to a barrel of oil, making it vulnerable to manipulation by the Venezuelan government.