Marshall Islands in Pacific Ocean is set to become first country in world to recognize cryptocurrency as its legal tender and adopt transparent crypto monetary system. The parliament of island has passed law to create the digital currency called “Sovereign” with symbol SOV to raise some hard cash to pay bills and boost economy.
The Marshall Islands is partnering with Israeli fintech startup Neema to launch its SOV. It will have equal status with US dollar as form of payment. The island country will issue 24 million SOVs in Initial Currency Offering (ICO). It will be circulated as legal tender in the country, alongside its current local currency, US dollar.
SOV issued by Marshall Islands will be different from other cryptocurrencies including bitcoin because it will be officially recognized by law as legal tender and effectively backed by government. SOV is based on permissioned protocol, dubbed “‘Yokwe” (meaning “hello” in local island language), which requires blockchain users of this distal currency to authenticate and identify themselves, thus avoid anonymity that has kept other cryptocurrencies from gaining support from governments.
Initially 6 million SOVs will be sold to international investors and proceeds from it will be used to pay for its budget, invest in projects to mitigate effects of global warming and support those people still affected by US nuclear testing. It will also hand out 2.4 million SOVs to its residents and they can use it for everything from paying taxes to buying groceries,
The Marshall Islands is closely aligned with US under Compact of Free Association and uses US dollar as its official currency. Under compact association, US provides the Marshall Islands with about $70 million each year in assistance. In turn, US runs a military base on Island’s Kwajalein Atoll. Venezuela was the first country to officially launch its own cryptocurrency named Petro, backed by crude oil reserves but its validity as legal tender is not yet known.