The Republic of Marshall Islands, a country in Oceania that is geographically part of Micronesia and is inhabited by more than 50,000 people using the United States Dollar as its official currency, is set to launch its own sovereign cryptocurrency. Compared to a cryptocurrency – a currency which the state has no power over – a sovereign currency is a legal tender officially recognized by the state as a trade facilitator.
The SOV, Marshall Islands soon-to-be-issued own currency, will be the first cryptocurrency in the world where a nation has sovereign power over. Marshall Islands will also be the first country to officially recognize a digital currency. The recently released Venezuelan Petro has yet to be sovereign under the law of Venezuela. According to Hilda Heine, the president of Marshall Islands, issuing a currency of their own is historic. She declared, “This is a historic moment for our people, finally issuing and using our own currency, alongside the USD. It is another step of manifesting our national liberty. Allocating SOV units directly to the citizens will circulate the currency and distribute wealth efficiently to our people.”
The country plans to release the SOV in minimal amounts to its citizens. Doing so ensures that all will have equal chance to begin saving and spending SOV prior to it becoming a global investment. Any revenue the SOV will generate will be placed back into the economy of Marshall Islands in order to boost its energy services and healthcare.
Neema, an Israeli fintech start-up, will be working with the Republic of Marshall Islands in issuing the cryptocurrency. Barak Ben-Ezer, Neema co-founder, explained to Bitcoin Magazine why he describes SOV as a “big deal”: “SOV is a big deal because, until now, all cryptos were in regulatory limbo.” He added, “None of them was considered ‘real’ money by the IRS, SEC, etc. Accordingly, the IRS taxed them with capital gain tax, and the SEC wants to regulate all ICOs as issuance of securities. The IRS explained in 2014 why it’s not considered real money: because it’s not the legal tender of a sovereign nation.” Ben-Ezer highlighted SOV’s benefits as being a digital currency that operates within a regulatory framework which sovereign currencies fall legally under. He declared that users of SOV need not worry about capital gains. Plus, it could even be sold like any currency such as the Yen or Euro.