Marshall Islands to Issue National Cryptocurrency
CryptoBit News Today2 min read
The Republic of the Marshall Islands has passed legislation to issue a new digital legal tender to supplement the U.S. dollar, marking a historic first for a sovereign nation.
According to the bill posted on the Sovereign's official Telegram channel, the legislation's goal is to establish and issue a decentralized, blockchain-based digital currency as the country's legal tender. The legislation indicates that the Ministry of Finance will release the cryptocurrency and launch it through an initial coin offering.
"This is a historic moment for our people, finally issuing and using our own currency, alongside the USD," said Marshall Islands President Hilda C. Heine in welcoming the news.
Facing dire financial pressures from climate change and the looming end of U.S. reparations, the Marshall Islands is seeking to raise funds by issuing its own cryptocurrency. The government expects the digital SOV offering to generate "hundreds of millions of dollars."
Grants for a Nation in Need
According to reports, 70% of the funds raised will be used to offset expected budget gaps post-reparations and pay for public health costs, while 10% will fund sustainability efforts. The remainder of the funds will be allocated directly to residents, which President Hilda Heine stated would circulate the currency and effectively distribute wealth to the populace.
The United States provides the islanders with $30 million in yearly compensation, supplying a major portion of the national budget. That arrangement is set to sunset in 2023, creating an urgent need for new sources of funding.
Yokwe: The Underlying Blockchain
The Israeli money transfer startup Neema will develop the underlying technology for the new cryptocurrency. Neema is an Israeli startup that provides an app for transferring money internationally.
The platform will use a new public blockchain protocol called Yokwe. The Yokwe ledger was created to tackle the anonymity issues that make many financial institutions hesitant to use cryptocurrencies such as bitcoin and ether.
On Yokwe, all accounts must be linked to verified real identities, but those identities remain encrypted and private. This creates a transparent system without compromising user privacy. "The Yokwe protocol provides a promising balance between transparency and privacy and we're excited to develop it further," said Peter Dittus, an economist advising Neema and former Secretary General of the Bank for International Settlements.
Contrasted to Venezuela's Petro
Other nations, such as Venezuela, have sought to support their budgets through crypto offerings, and countries including Iran and Russia have looked into state-issued digital currencies.
In February, Venezuela launched its state-backed "Petro" digital token to wide criticism and controversy. American lawmakers have asserted that Venezuela created the petro to circumvent international sanctions.
A key difference is that the Republic of the Marshall Islands is a close ally of the U.S. and its currency will have a value determined by the market, not pegged to oil as Venezuela has done.
The government anticipates the Sovereign will not only raise needed capital but also distribute wealth efficiently to the whole population.
