The Pacific nation of the Marshall Islands is partnering with Israeli startup Neema to introduce the world's first government-backed cryptocurrency.
This week, the Marshall Islands passed the Declaration and Issuance of the Sovereign Currency Act, which declares "decentralized currency as legal tender of the Marshall Islands for all debts, public charges, taxes, and dues."
By adopting a cryptocurrency as the coin of the realm, the tiny island nation has made a groundbreaking decision. Thus far, the main countries examining the use of cryptocurrency have been Venezuela and Iran, who see blockchain technology as a way of skirting sanctions.
Neema, a Tel Aviv-based company, has been charged with creating the blockchain-based currency and the infrastructure needed for the Marshall Islands coin of the realm to go digital – including an internet connection for the islands and a payment system that will ensure complete security, access, and convenience for Marshall Islands users. The company is expected to complete the process later this year.
Dr. Joseph Wyse, head of the patent department at the law firm of Dr. Eyal Bressler & Co., explained that "This is a good, appropriate use of cryptocurrency technology. First of all, the new currency, which is called SOV, won't be hidden from the sovereign government of the Marshall Islands and is therefore different from cryptocurrencies in other countries
"Second, the Marshall Islands government will issue the currency for all its citizens, using their IDF numbers and a fingerprint for each person, using the Israeli blockchain technology.
"Third, the Marshall Islands use the U.S. dollar as their legal currency, and there is a rational connection between the dollar and the SOV. This kind of government currency, tied to foreign currency, is a welcome development. The U.S. government has silently agreed [to the move], and the U.S. Treasury will follow the trial with great interest," Wyse said.
