Marshall Islands may become first sovereign state to make crypto its legal tender

22 May, 2018
by Joeri Cant
News
Marshall Islands may become first sovereign state to make crypto its legal tender

Marshall Islands, a small country of 53,000 people in the middle of the Pacific Ocean, may become the very first sovereign state to make a cryptocurrency its legal tender.

Bitcoin, for example, is a legal currency in countires like the United States, Japan, Philippines, and South Korea, but it has not gained legal tender status anywhere in the world yet. Legal tender status means that its official digital currency must be accepted as a means of payment.

If the Marshall Islands were to make this happen, it would be illegal not to accept this cryptocurrency in exchange for goods and services within a jurisdiction. That is a bold step the government of the Marshall Islands is taking with its official cryptocurrency named Sovereign (SOV).

Minister-in-Assistance to the President & Environment Minister, David Paul said: “While there is understandable concern by policymakers and regulators worldwide of the misuse of cryptocurrencies for tax evasion, money laundering, and terrorist financing, the SOV is designed on purpose to be unusable for these purposes.”

Paul added that SOV will act like regular money, which should alleviate the regulatory uncertainty for businesses and individuals. SOV will be complementary to the US dollar, the country’s only legal tender since 1982. 

“This creates legal certainty for its use, because all jurisdictions have laws in place for dealing with legal tender, whereas private cryptocurrencies are dealt with differently in different jurisdictions. It was clear that there was a huge market need for a non-anonymous blockchain system that can operate within a regulated environment.”

Chief Executive Officer Ben-Ezer of Neema, an Israeli fintech company, was the first to propose the idea to the island nation and is behind the creation of the proprietary digital currency.

Ben-Ezer will now have to prove to the world that cryptocurrencies are a real alternative to fiat money in a real market economy. He expects "a global impact from this as it may set off a chain reaction on how cryptocurrencies are viewed and regulated."

SOV will soon be available for purchase at exchanges and tourists are also able and welcomed to acquire them.

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