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Marshall Islands National Crypto Also Issued as Physical Cash

Marshall Islands National Crypto Also Issued in Physical Cash

The Marshall Islands’ national cryptocurrency, Sovereign (SOV), will reportedly also be issued in the form of physical banknotes backed by blockchain technology.

The announcement came from decentralized smart card wallet manufacturer, Tangem, with the company saying the cash will be launched in a scheme alongside the Marshall Islands government to order to provide ”fair and equal access to their digital currency, whether or not they have [an] internet connection”.

In a press release, Tangem stated it would create cards containing a blockchain-enabled microprocessor that will visually appear as unique banknotes, offering zero-fee transactions for processing the cash with ”immediate” transaction verification.

The Pacific island nation became the first jurisdiction to offer a legal cryptocurrency in February 2018, issuing SOV alongside the existing tender, USD. The new cryptocurrency ”cash” is the latest development as the Marshal Islands realizes the practicalities of having a national digital currency that is expected to be useable across the island by all residents.

While the country’s efforts set an appealing standard for the cryptocurrency community, not all reaction has been positive. In August last year, the International Monetary Fund warned that SOV put the nation’s relationships with foreign banks at risk, even requesting the country to reconsider its decision.

 

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Marshall Islands Sovereign Crypto Confirmed for 2019

Marshall Islands Sovereign Crypto Confirmed for 2019

The team behind Marshall Islands’ national cryptocurrency have announced major achievements in its progress, despite a difference of opinion in the government.

The team said it has been able to make “significant progress in finding partners, investors, and developers” for the coin, dubbed the Sovereign (SOV). The Sovereign token has also made a partnership with Tangem, a firm that specializes in smart banknotes. With its pace, the team expects to launch the coin within this year.

The Marshall Islands cryptocurrency project was announced by the tiny Pacific nation in February 2018. It currently uses the US Dollar as its national currency and the move has seen significant opposition from financial institutions around the world. International Monetary Fund (IMF), was particularly not in agreement of the move and said, “The potential benefits from revenue gains appear considerably smaller than the potential costs arising from economic, reputational, AML/CFT, and governance risks.” The US State Treasury was also vocal about its apprehensions.

Marshall Islands, though an independent country, is a small island nation that has close ties with the United States. The US conducted over 67 nuclear tests from 1946 to 1958 over there.

It is not the first country to consider a national cryptocurrency. However, it is facing immense pressure locally on both sides of the fence. In November, President, Hilda Heine survived being removed from the office through a vote of no confidence. The other extremity has seen the pro national crypto officials hire Steve Tendon, the founder and president of Blockchain Malta Association.

The national team of Marshall Islands is led by another pro crypto persona. Dr Peter Dittus is the chief economist of the project and is the former Secretary General of the Bank for International Settlements.

 

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IMF Puts Pressure on Marshall Islands Plan for National Crypto

The Marshall Islands plans for a national cryptocurrency has encountered a setback after the International Monetary Fund (IMF) warned against the idea.

In a 58-page report, the IMF suggests that banks will refuse to work with the island’s businesses should the government go ahead with its plans for adopting the Sovereign (SOV).

Politically, the Marshall Islands is a presidential republic in free association with the United States, with the US providing defense, subsidies, and access to US-based agencies such as the Federal Communications Commission and the United States Postal Service.

Although the new cryptocurrency, the Sovereign (SOV), was set to displace the US dollar as the official currency, it was likely that the country’s 53,066 population would continue to use the dollar until banks and credit companies put in place a framework for the currency’s use. The new report by the IMF could put the future plan in jeopardy; the IMF has used provocative language urging the island republic to cease its activities, with this warning:

“The potential benefits from [digital currency] revenue gains appear considerably smaller than the potential costs arising from economic, reputational, AML/CFT, and governance risks. In the absence of adequate measures to mitigate them, the authorities should seriously reconsider the issuance of the digital currency as legal tender.”

There is a critical view held by economists in some countries whose governments may be considering similar moves to adopt a national cryptocurrency, that a mass decentralization of financial power may result in the diminishing of IMF’s authority. A warning by IMF’s deputy director Dong He earlier this year clearly suggests that the organization may be secretly worried at the movement towards global digital currency adoption.

He argued that “crypto assets may one day reduce demand for central bank money”, suggesting central banks should “forestall the competitive pressure crypto assets may exert on fiat currencies”.

David Gerard, author of ‘Attack of the 50-foot Blockchain’, asserts that the IMF is not so heavy-handed as they might appear, suggesting that, “The IMF is not strong-arming the Marshalls, what they’re doing is describing what will obviously happen if they proceed.”

As yet there has been no comment from the Marshall Islands authorities over the IMF suggestion they should “seriously consider” their great crypto-leap forward. Other countries considering similar plans to integrate cryptocurrency into their banking systems at this level will be interested to see how this situation develops in the weeks to come.

 

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