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Updated 00:46 13/12/18

The Marshall Islands are set to have the world’s first sovereign cryptocurrency

Liam Sheasby

By Liam Sheasby, News Editor

25 May 2018

The Marshall Islands are nearing international approval to become the first country in the world to have a sovereign cryptocurrency – abandoning the US Dollar as their main currency in the process.

The Pacific nation’s parliament approved plans back in February, before President Hilda Heine signed off on the move in March. The decision forces banks and other financial institutions worldwide to acknowledge a cryptocurrency and to allow transactions with it as well as the exchange of it.

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The new digital currency is known as SOV and will be implemented by Israeli financial technology start-up Neema. The currency will not be anonymous, meaning users will have to identify themselves on the blockchain that records all transaction data.

David Paul – minister-in-assistance to the President of the Marshall Islands – spoke to Reuters in February and said: “This is the way of the future. As a country, we reserve the right to issue a currency in whatever form it is, whether in digital or fiat form”.

SOV will sell a total of 24 million tokens. 6 million of these will be offered to international investors and a further 2.4 million will be for citizens. Proceeds generated will go towards the Marshall Islands’ National Trust Fund.

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Image courtesy of Google Maps. The Marshall Islands (red marker) in the Pacific Ocean. Neighbours include Guam, Nauru, and Tuvalu.

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The Marshall Islands are a small island chain in the Pacific Ocean, situated between Hawaii and Papua New Guinea. Their population is a little over 53,000 according to the World Bank’s data from 2016, which is similar to the seaside town of Weymouth.

In a statement after the signing back in March, President Heine said: “This is a historic moment for our people, finally issuing and using our own currency.

“It is another step of manifesting our national liberty.”

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The Marshall Island chains depicted in full, with special focus on the Majuro atoll, where the island capital resides.

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Prior to the Second World War, the islands came under Japanese jurisdiction but afterwards became part of the United States. US rule lasted until 1983 when the islands signed a Compact of Free Association with the USA and, three years later, they declared independence – whilst still abiding by the Compact deal (since amended in 2004).

The impact of changing from the US Dollar is likely to be minimal, with President Heine suggesting the Dollar would still be an accepted national currency. The US military has a base in the archipelago, which is the second largest employer in the Marshall Islands and is required as part of the Compact, in which the United States are legally responsible for the protection of the islands.

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