Recently, China stated that they were close to creating their own digital currency. Now, the Marshall Islands are next in line by declaring that they are getting ready to launch their own cryptocurrency. The Marshallese sovereign, or SOV, is essentially a get rich quick scheme for a country that is quickly running out of money. David Paul, the minister-in-assistance to the president of the Republic of the Marshall Islands, recently spoke about the project at a conference in Singapore.
“With the blockchain technology in place, we thought this was an opportune time to establish our own legal tender” and lessen the nation’s dependence on the dollar, Paul said in an interview from the sidelines of the conference. “As a small country it’s going to be easier and faster for us to make decisions and respond to the market” as a digital coin is introduced.
It’s a big gamble as the IMF threatened to cut the islands off from the global banking system if they moved forward with creating their own crypto. The Marshall Islands currently use the US dollar as the nation’s currency. The US treasury and the IMF’s purported fear is that the SOV might be the currency of choice for terrorists trying to move money outside the view of the U.S. government or for money launderers trying to evade taxes.
The islands are in a strategic position for the United states. Aid accounts for about half of the government’s revenue. Under the current agreement, foreign aid is scheduled to end in 2023.
The design of SOV would require every holder to register her identity, which should make the SOV unusable for money laundering and terrorism financing. The US treasury and IMF are still not convinced. The Marshallese government is open to alternative solutions from other countries, but creating their own crypto still seems to be the best one at this point in time.