The Marshall Islands is moving ahead with plans to issue its own cryptocurrency that will be circulated as legal tender along with the US dollar.
The nuclear-ravaged nation today announced the official launch of the sovereign (SOV), which will have “a fixed money supply with fixed growth” as well as closing “the secrecy and anonymity loopholes” exploited by criminals and terrorists. The country has capped the SOV supply at 24 million tokens in order to prevent inflation.
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The Marshallese government announced earlier this year that its fiat-based cryptocurrency would be governed by an independent, non-profit organization called “SOV Development Fund.” The Fund’s mandate is to support the launch of the new coin through a board of seven people, three of whom will be elected by the other four who are chosen.
Two directors will be nominated by the government and two will be nominated by SFB Technologies, the company it hired to develop SOV’s compliant blockchain infrastructure. These four directors will then appoint three further directors, elected from experts in the fields of blockchain, banking, and monetary management.
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“Every individual using SOV must be identified by an approved verifier of their choice, such as a bank or an exchange,” said David Paul, minister-in-assistance to the president of the Marshall Islands.
Paul said the SOV would be issued to the public through an initial coin offering; then it will act like regular money. The country hopes the residents will use the SOV for everything from paying taxes to buying groceries.
Plans for possible sovereign cryptocurrencies have gained momentum in recent months. A similar attitude toward digital currencies has been developing recently with central banks in Russia and China already announcing trial runs of prototype cryptocurrencies, which could serve as rivals to the likes of Bitcoin and Etherium.
Part of this progress, however, was achieved only because the authorities in these countries don’t want to cede the cryptocurrency space to companies it has no control over, claiming this could create a long-term jolt for national economies.
The Russian central bank also revealed it’s considering the launch of a gold-backed cryptocurrency for international settlements. Venezuela, meanwhile, has already gone ahead with a digital token called the Petro, backed by oil.