The tiny Marshall Islands is creating its own digital currency in order to raise some hard cash to pay bills and boost the economy. Leaders hope the SOV will one day be used by residents for everything from paying taxes to buying groceries.
The Pacific island nation said it became the first country in the world to recognize a cryptocurrency as its legal tender when it passed a law this past week to create the digital “Sovereign,” or SOV. In the nation of 60,000, the cryptocurrency will have equal status with the U.S. dollar as a form of payment.
The Marshall Islands is partnering with Israeli company Neema to launch the SOV. It plans to sell some of the currency to international investors and spend the proceeds. The Marshall Islands is closely aligned with the U.S. under a Compact of Free Association and uses the dollar as its currency. Under the compact, the U.S. provides the Marshall Islands with about $70 million each year in assistance. The U.S. runs a military base on Kwajalein Atoll.
The Marshall Islands says the SOV will require users to identify themselves, thus avoiding the anonymity that has kept bitcoin and other cryptocurrencies from gaining support from governments. The law states that the Marshall Islands will issue 24 million SOVs in what it calls an Initial Currency Offering. Half of those will go to the government and half to Neema.
The Marshall Islands intends to initially sell 6 million SOVs to international investors. It says it will use the money to help pay for the budget, invest in projects to mitigate the effects of global warming and support those people still affected by U.S. nuclear testing. The country also intends to hand out 2.4 million SOVs to residents.