Marshall Islands Offers Pre-Sale for Sovereign (SOV) Digital Coin
A long-term sale event will distribute preliminary assets, which will then be exchanged for the SOV once it is launched.
The Marshall Islands has chosen a delayed scheme to launch its Sovereign (SOV) digital coin, which will be considered legal tender and work as a national currency within the borders of the small nation. David Paul, Environment Minister and Minister-in-Assistance to the President of the Republic of the Marshall Islands, announced the plan during the Invest: Asia conference.
The SOV will be issued in stages, in the format of Timed Release Monetary Issuance (TRMI). A pre-sale will begin, distributing a token that will be a placeholder for actual SOV once the coin receives its own mainnet. The issuance of the SOV has taken months to complete, and may not arrive any time soon, despite being announced a year ago.
The SOV may not be counted as legal tender in other countries. However, Paul, who is a proponent of blockchain technology, believes such an asset would benefit the country. Due to its remoteness, the Marshall Islands have limited banking connections, and face expensive international remittances.
“Blockchain changes everything,” the Minister said.
“Blockchain won’t just let us create our own money for the first time — the sovereign is a new kind of money, one which enshrines our Marshallese values,” said Paul.
The SOV blockchain will be more restricted in comparison to public blockchains. Receiving SOV will only happen after verification. The coin will have a limited supply and an algorithmically preset inflation of 4% annualized. All citizens of the Marshall Islands will also receive an airdrop of SOV automatically, and share in 10% of the total supply.
“This is something which no other government has done, made possible by blockchain,” Paul said.
For outside buyers, the country has opened a pre-registration site, to potentially give access to the initial token sale.
The Marshall Islands has been suffering economic hardships and population outflows, hoping to patch up its leaking economy by issuing a new legal tender. However, the IMF remained skeptical, warning of risks related to launching the digital coin.
“Directors encouraged the authorities to be cautious about issuing a decentralized digital currency as a second legal tender and carefully consider the macroeconomic and financial stability risks. They noted that the potential benefits from revenue gains could be considerably smaller than the potential costs arising from economic, reputational, and governance risks,” the IMF stated in a recent consultation.