The Marshall Islands becomes the first country to introduce crypto as legal tender
In a bid to raise money, the Marshall Islands has announced it is creating its own cryptocurrency.
It plans on recognizing the new digital currency as legal tender, making it the first country in the world to do so.
Following days of debate, the small Pacific Island nation passed the SOV bill on Monday.
The Sovereign Currency Act will allow the small state to create the “sovereign.”
Unlike some other cryptocurrencies, uses identities won’t be anonymous.
Those who use SOV will be required to reveal their identity so payments can be traced.
Equal to the US Dollar
The new virtual currency will be granted equal status to the US dollar, according to President Hilda Heine, who said in a statement:
“This is a historic moment for our people, finally issuing and using our own currency, alongside the USD (US dollar).
“It is another step of manifesting our national liberty.”
Currently, the official currency of the Marshall Islands is the US dollar, which it uses under a Compact of Free Association.
Under this agreement, the US gives the country around $70 million a year in aid.
In return, the United States has its military base, Kwajalein Atoll, located on one of the islands.
The US has slashed the aid budget for the Marshall Islands, which by 2023, will drop to just $30 million.
According to the Marshall Islands, this will cause “high risk for the country’s budget stability.”
Initial Currency Offer
In an Initial Currency Offer, the Marshall Islands will issue 24 million SOV coins.
The first 12 million will be held back by the government.
The other half will go to Neema, the Israeli company the country has partnered with to help launch the cryptocurrency.
According to a report by the Star, the amount of cryptocurrency going to the company has caused concern for many lawmakers.
Other government officials have argued, however, that the cash will give the country much-needed help.
Distribute the wealth
The government plans to sell 6 million SOVs to international investors while distributing 2.4 million SOVs among its 67,000 residents.
President Heine explained how the country would distribute the wealth evenly, saying:
“Allocating SOV units directly to the citizens will circulate the currency and distribute wealth efficiently to our people.
“In addition, The RMI [Republic of the Marshall Islands] will invest the revenues to support its climate change efforts, green energy, healthcare for those still affected by the US nuclear tests, and education.”
The President’s Minister in Assistance David Paul said in a statement that the nation would allocate 10% of the budget for environmental issues:
“We are excited to be the world’s first nation to leapfrog into the era of digital currencies.
“Ten percent of our proceeds from the ICO will be directed towards a Green Climate Fund, to help us fight the effects of global warming, coming from the burn of fossil fuel by the large industrial nations, and hurting the small Island Nations the most.”
Venezuela became the first country in the world to launch its own cryptocurrency, last month.
“el Petro” is backed by oil reserves and other natural resources.
Some other countries have agreed to allow cryptocurrencies as a means of payment, but no other country has made a crypto legal tender, however.