The Sovereign is safe. The Marshall Islands has been dreaming of introducing a state-backed cryptocurrency called the Sovereign since this past March and the hopes were almost eliminated after a small number of lawmakers in the country’s Parliaments had tried to oust the country’s president, Hilda Heine, over the move. Heine is still in charge after a failed no-confidence vote and the country will now move forward with its plan.
Parliament voted straight down the middle – 16 to 16 – to remove Heine and, absent a tie-breaker, she cannot be removed. The opponents, driven more by their desire for power than actual concern over the Sovereign, were not able to pull off their coup.
Now that the vote has come and gone, Heine and the Finance Ministry will move forward with the Sovereign. If accepted, the Sovereign will become the official tender of the country, possible replacing the U.S. dollar, which currently holds the title. It is also possible that both could be recognized as legal tender and used simultaneously.
The International Monetary Fund (IMF) has previously cautioned the nation that moving forward with the state-backed crypto was not advisable, as it ran the risk of forcing some international partners to decide to cut off relations. It’s interesting that the IMF would take that position, given that it only just recently asserted that state-backed cryptocurrencies have significant merit.
Heine has said that the introduction of the Sovereign would be an “historic moment for our people, finally issuing and using our own currency. [It] is another step of manifesting our national liberty.”
It won’t be historic for just the Marshall Islands – it would be one for the entire cryptocurrency ecosystem.
The plan is reportedly being supported and implemented by Israeli startup Neema. It has created the program and has also designed an initial coin offering (ICO) to see the launch of Sovereign that, according to the company, will provide the country with a $30-million windfall.
The deal isn’t completely ready to take off yet. For the Sovereign to really gain its rightful place, it has to meet requirements established by Europe and the U.S. Additionally, the IMF will have to give it the thumbs-up, as well. Given the IMF’s previous comments, that approval won’t come easy.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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This past May, the Marshall Islands announced that it was planning to introduce a new national currency. As opposed to traditional fiat, however, with the US dollar at its core, the nation’s new main cryptocurrency would be a digital currency. The plans have been met with considerable resistance by the international currency and there are now concerns that the country may have to scrub the plans.
Two months ago, the International Monetary Fund (IMF) warned against the move, pointing out that the newly-created “Sovereign” cryptocurrency wasn’t viable. It (erroneously) argued that cryptocurrency carried with it certain inherent risks that wasn’t found with fiat. It asserted that crypto is rife with examples of money laundering and financial integrity – traits that, of course, are never seen with fiat.
The organization also asserted that the country stood the risk of losing international business partners. According to a response to the country’s move in September, the IMF stated, “In the absence of adequate risk mitigating measures, the issuance of a decentralized digital currency as a second legal tender would not only increase macroeconomic and financial integrity risks but elevate the risk of losing the last U.S. dollar CBR [cost-benefit ratio].”
This has many wondering if the Marshall Islands might reconsider its plans. Despite assertions to the contrary, the country might now be doing just that. This past week, threats to cut financial aid to the country have begun to surface and the President of the Marshall Islands, Dr. Hilda Cathy Heine, has come under political attack. Eight senators have already signed a motion of no confidence in an effort to remove Heine from power.
Of course, fiat pundits always resort to the same stale tactics when trying to denounce the benefits of cryptocurrencies. This, in spite of repeated evidence indicating that fiat is much more dangerous than crypto. In economist Richard Wright’s account of currencies, “Less Cash, Less Crime: Evidence from the Electronic Benefit Program,” he points out that physical money is much more likely to be used for criminal activity than electronic alternatives. He stated, “It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods where street offenses are concentrated, a significant source of circulating cash stems from public assistance or welfare payments.”
The Marshall Islands needs to continue moving forward with its plan to build an economy around cryptocurrency. In doing so, it will not become a part of history; it will make history. As William Arthur Ward said, “Adversity causes some men to break; others to break records.”
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