Developers of the Marshall Islands' national cryptocurrency, the Sovereign (SOV), plan to move forward with the launch of the coin this year. Despite the challenges to getting the SOV project off the ground, the team has made "significant progress in finding partners, investors, and developers to build the SOV."
In the Beginning …
The SOV was first announced in February 2018 with the Sovereign Currency Act 2018. The act stated that the SOV would be "issued by the Ministry of Finance, in accordance with this Act and shall be legal tender of the Republic of Marshall Islands."
Although the SOV will be virtual currency issued on a blockchain, it has features, referred to as the "Yokwe framework," that distinguish it from other cryptocurrencies. The framework acts as an identification protocol, which removes the general anonymity of most cryptocurrencies. Citizens who plan on owning SOV will need to identify themselves on a blockchain network in order to help regulate the Islands' banking system. The purpose of the "all-important" Yokwe protocol is to ensure that the SOV is compliant with international anti-money laundering regulations.
No Pain, No Gain
In September 2018, the International Monetary Fund (IMF), a group of 189 countries that work toward global monetary cooperation, published a press release warning the Marshall Islands against its plans to create a government-issued digital currency.
The IMF believed that unless strong anti-money laundering and anti-terrorism funding measures were implemented, the SOV could cause the country to lose its US dollar correspondent banking relationship (CBR). Losing its CBR would result in "potential disruptions to the flows of external aid," and also cause issues with access to the US dollar, the Marshall Islands' legal tender.
By November 2018, President Hilda Heine of the Marshall Islands faced a vote of no confidence that was prompted, in part, by her plans to introduce the SOV. The results of the vote could have also removed Heine from office.
The vote was split, 16-16: Heine stayed in office and the SOV project continued. Dissenting senators accused Heine of "tarnishing" the country's reputation with the proposal of the state-backed cryptocurrency.
The Yokwe protocol was planned in anticipation of concerns about money laundering and terrorism. The IMF's press release noted that the Marshall Islands' authorities had:
"anticipated that risks of the SOV being misused for [money laundering]/[terrorist financing] will be sufficiently mitigated by the fact that the identity of the SOV users will be recorded on the blockchain and that the SOV could only be traded through global cryptocurrency exchanges approved by the [Republic of the Marshall Islands] government."
In addition to building the Yokwe protocol, the developers have partnered with several crypto- and blockchain-related companies to help with the rollout of the SOV and its sustainability.
Whether the storied coin will see the light of day in 2019 is still up in the air. The SOV developers' post quotes an old Marshallese proverb, Aijar Jenlik, which means "to encourage and advise those working on an important task so it is performed in a manner that would be impossible to destroy."
The SOV has experienced a lot of challenges within less than a year since its announcement. The SOV is not yet indestructible.