Sovereign Currency Act of 2018 is a statute of the Legislature of the Marshall Islands which was passed on February 26, 2018. The Act created and issued a digital decentralized currency ("cryptocurrency") that is used as a legal tender of the Marshall Islands. [1]
The Sovereign Currency Act of 2018 creates and issues the Sovereign (SOV) its own cryptocurrency. [2] The purpose of the Act was to lower the dependence on the USD. [3]
The Sovereign cryptocurrency was created through a partnership with Neema, a financial technology startup. [2] Neema uses "Yokwe" protocol to ensure anonymity while also linking each account with a verified government identity that is both encrypted and private. [4] The SOV is issued by the Ministry of Finance and was introduced through an initial coin offering (ICO). The number of SOV’s in circulation will start at 24 million and will grow by 4% each year. [5] RMI President Hilda C. Heine called the creation of SOV "another step of manifesting our national liberty." [6]
In September 2018, the International Monetary Fund (IMF) released a report warning the Marshall Islands not to launch its own cryptocurrency. Primary concerns about the cryptocurrency included that the revenue from the ICO would be smaller than expected and that proper governance on the cryptocurrency were not adequate. [7]
