Cryptocurrency Current Affairs
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.
Venezuela become first sovereign country to officially launch its own cryptocurrency called Petro backed by oil, gas, gold and diamond reserves to circumvent US-led financial sanctions. Venezuelan President Nicolas Maduro has claimed that the pre-mined cryptocurrency Petrohas raised US $735 million on the first day of its pre-sale.
The Petro aims to help Venezuela to advance in issues of monetary sovereignty, to make financial transactions and overcome financial blockade. It is based on blockchain technology. Its value will be pegged to price of barrel of Venezuelan oil from the previous day. Government will accept Petro as a form of payment of national taxes, fees, contributions and public services
Venezuelian government will issue 100 million coins of Petro of which 38.4 million is available for pre-sale and 44 million coins will be offered in Initial Coin Offerings (ICO) in March 2018. The rest 17.6 million coins will be retained by Venezuelan Superintendency of Currency and Related Activities (SUPCACVEN).
With encouraging response to Petro, Venezuelan government is planning to launch another cryptocurrency based on gold called Petro Gold which will be backed by gold. It will be more powerful and strengthen the Petro. But Petro Gold will, be not the first cryptocurrency based on gold. Many such currencies are traded in market including one called RMG created by The Royal Mint in Britain.
The success of Petro depends a lot on how global crypto-community responds to its offer. Moreover, governments and regulators across the globe have already started warning investors against the financial and legal risks associated with digital or crypto-currencies. However, Venezuela is successful in managing digital assets, it will be able to circumvent sanctions imposed on it and it could open new ways for other sanctioned countries to be financially stable despite the curbs.
Venezuela, an OPEC member has one of the largest oil reserves in the world. It has over 300 billion barrels oil reserves — largest in the world. The socialist country earns 95% of its forex from oil exports is going through one of the biggest financial crisis in its history. With new official cryptocurrency, Venezuela hopes to overcome economic blockade imposed by United States which has resulted in 99% depreciation of value of its fiat currency Bolivar.