• 208 days Could Crypto Overtake Traditional Investment?
  • 213 days Americans Still Quitting Jobs At Record Pace
  • 215 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 218 days Is The Dollar Too Strong?
  • 219 days Big Tech Disappoints Investors on Earnings Calls
  • 219 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 221 days China Is Quietly Trying To Distance Itself From Russia
  • 221 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 225 days Crypto Investors Won Big In 2021
  • 226 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 226 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 229 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 229 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 232 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 233 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 233 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 235 days Are NFTs About To Take Over Gaming?
  • 236 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 239 days What’s Causing Inflation In The United States?
  • 240 days Intel Joins Russian Exodus as Chip Shortage Digs In
Has The Dogecoin Hype Fizzled?

Has The Dogecoin Hype Fizzled?

Dogecoin crashed nearly 40%, trading…

Cryptocurrency Markets Have Gone Amok, Again

Cryptocurrency Markets Have Gone Amok, Again

Seasoned cryptocurrency traders are, perhaps,…

Will Facebook’s Crypto ‘Libra’ Challenge Bitcoin?

Will Facebook’s Crypto ‘Libra’ Challenge Bitcoin?

Facebook has finally revealed its…

Crypto Insider

Crypto Insider

Cryptoinsider.com

Crypto Insider provides high-quality, long-form analytical pieces, investigative journalism, with less emphasis on breaking news. Our mission is to maintain high journalistic standards in the…

Contact Author

  1. Home
  2. Cryptocurrencies
  3. Alt-Coins

IMF Takes Aim At The Marshall Islands' Sovereign Crypto

Marshall Islands

In February the Republic of the Marshall Islands (RMI), an island country located near the equator in the Pacific Ocean with a population of about 50,000, announced its plan to issue a cryptocurrency that will be legal tender.

According to the plan the new currency “Sovereign” (SOV), developed in partnership with Israeli fintech startup Neema, would circulate as legal tender in the country, alongside its current local currency, the U.S. dollar. The deployment of the SOV would make the RMI the first sovereign nation to issue a cryptocurrency that is legal tender in the nation.

“This is a historic moment for our people, finally issuing and using our own currency, alongside the USD,” said RMI President Hilda C. Heine. “It is another step of manifesting our national liberty."

I concluded my February article on the planned SOV launch noting that the RMI is a tiny island nation, but it is a sovereign nation and a member of the UN. Therefore, if the RMI will eventually deploy a cryptocurrency that is also legal tender, the impact could be huge.

Huge potential impact indeed, but it's also hugely probable that the big boys will very much dislike the idea and bully the RMI to kill it in the cradle, I should have added.

Now, in "what could be seen as wise financial counseling or a threat, the International Monetary Fund [IMF] is urging the Republic of the Marshall Islands (RMI) to abandon its plan to launch a cryprocurrency as legal tender," Gizmodoreports. The IMF released a report that strongly advises against the SOV launch plan, stating that the plan would endanger the RMI's relations with the US banking system. Related: Is Diamond Demand Crumbling?

Here's the threat:

"The RMI’s only domestic commercial bank is at risk of losing its last U.S. dollar correspondent banking relationship (CBR) with a U.S.-based bank as a result of heightened due diligence by banks in the U.S. In addition, RMI plans to issue a decentralized digital currency as a second legal tender in addition to the U.S. dollar and the relevant law was enacted in February 2018..."

"Unless strong AML/CFT [Anti Money Laundering / Countering Financing of Terrorism] measures are implemented, the issuance of the SOV, as contemplated, will elevate the already high risks of losing the last U.S. dollar CBR. The law requires that all users of the SOV undergo standard 'Know Your Customer (KYC)' procedures and that their identity be recorded on the blockchain. However, neither the content of the 'standard KYC procedures,' nor the modalities of their implementation have been established. In addition, other key measures such as transaction monitoring, reporting of suspicious transactions, compliance monitoring, and sanctioning of compliance failures are not addressed. In light of the potential for digital currencies to be misused for money laundering and terrorist financing (ML/FT) purposes, the issuance of the SOV without effective implementation of comprehensive AML/CFT measures could offset recent progress in strengthening the AML/CFT framework, leading to increased scrutiny from the AML/CFT standard setter and potential countermeasures, including, possibly, the immediate loss of the CBR."

"It’s unclear how the RMI will respond to the report, but unfortunately true sovereignty in this world is complicated," concludes the Gizmodo story. This is, of course, very true. But I am persuaded that freedom for individuals, and sovereignty for nations, are very worth paying a price for.

One could think that the plan to reduce RMI dependence on the U.S. dollar and issue a sovereign cryptocurrency as legal tender is too bold, but I think it's not bold enough. In fact, the SOV would be based on a parmissioned blockchain controlled by the authorities. What else is new?

What is needed, I believe, is a small sovereign nation making the really bold move to accept a real, permissionless and public cryptocurrency, such as Bitcoin or Ethereum, as additional legal tender. The inevitable mobbing by powerful nations and their "independent" watchdogs would be more than compensated by the influx of capital and talent that the nation would attract.

By Giulio Prisco via Crypto Insider

More Top Reads From Safehaven.com

Back to homepage

Leave a comment

Leave a comment