Marshall Islands form development fund to establish its national cryptocurrency SOV

The Republic of the Marshall Islands (RMI) has created a non-profit organization to help the government establish, maintain, and implement the country’s national digital currency called the sovereign (SOV), according to a press release posted on Business Wire on Tuesday.

The SOV Development Fund aims to develop and maintain the long-term SOV framework, promote SOV and its uses domestically and internationally, help establish a crypto-based environment around the SOV, and smooth the SOV volatility by selling and buying SOV against USD.

“We are designing SOV in a way that will not place any burden on the government finances. The currency funds itself,” David Paul, the Minister In Assistance to the President, said in a pre-recorded video presentation.

The SOV, which is the island nation’s new official currency and legal tender, will run on blockchain with built-in compliance features that meet the standards of the Financial Action Task Force (FATF), Know Yor Customer (KYC), Counter Financing of Terrorism (CFT), and Anti-Money Laundering (AML).

The corporation will be governed by seven Board of Directors. Of which, two will come from the Government of the Marshall Islands and another two from the SFB Technologies. The last three will be elected by the four appointed directors from among experts in the fields of blockchain, banking, and monetary management.

Qualified majorities are needed to make all major decisions and make sure that the fund operates with “prudence and stability” and follows all obligations.

Once the SOV is established, RMI aims to shift to a blockchain-based governance model. The SOV will be gradually launched beginning 2021 with an initial issuance of tokens and a fixed yearly inflation rate of 4% thereafter.

The fund will be endowed with 30% of the total SOV currency in circulation.

Meanwhile, the US State of Montana also started recognizing utility tokens, exempting them from being considered as securities under the local rules.

The Bahamas also proposed a new framework to regulate the issuance and sale of digital tokens to lure blockchain business and crypto investments.