By Dionisia Tabureguci
The Republic of Marshall Islands (RMI) government has released the names of four funds that will receive a certain percentage of the country’s soon to be released government backed digital currency, or sovereign (SOV).
SOV – dubbed the world’s first real cryptocurrency by virtue of it being legally sanctioned by a sovereign state as legal tender – traces its genesis back to February last year, when the Marshall Islands’ parliament passed a law officiating its status as the country’s new legal tender.
In the SOV’s white paper released yesterday, RMI said out of the initial money supply of 24 million sovereigns, the government will keep 50 percent which will be distributed among four trust funds gradually over five years.
The funds are:
- The RMI National Trust Fund, which will support RMI’s national budget and other projects, when external grants to the RMI decline after 2023 (50% of governement’s share or 6 million SOV units);
- The Marshall Islands’ Green Climate Fund, to help prepare for and mitigate the impact of the effects of climate change, as well as to increase sustainability in the Marshall Islands (10 % or 1.2million SOVs);
- The Marshall Islands Nuclear Legacy and Health Care Fund, to help those affected by nuclear testing (20% or 2.4 million SOVs);
- The Resident Citizens SOV Allocation Fund, which is distributed directly to all Marshallese resident-citizens over a five-year period (20% or 2.4million SOVs)
The other half will be distributed to the SOV Development Foundation (30% or 7.2 million SOVs) – which will look after the ongoing development of the SOV; early investors (10 percent or 2.4million SOVs) – proceeds from this sale is slated to foot the bill for the SOV’s issuance; and appointed organisers (10 percent or 2.4 million) – these are payments to commercial partners of the SOV project.
The SOV’s white paper’s release coincides with the three-day Invest Asia Conference 2019 in Singapore, which ends today and was attended by David Paul, RMI’s Minister-in-Assistance to the Marshallese President Dr Hilda Heine.
In his keynote speech at the conference, Minister Paul outlined the four Marshallese values which underpin the design of the SOV, which are: “sustainable, fair, safe and simple.”
“SOV is sustainable because the supply grows annually at four percent. The market doesn’t like surprises. If I have the key to the money printing machine, I can fund any project I want, but it devalues your money. With SOV, we’ve said we don’t want to do that. We’re going to govern responsibly, so the supply is fixed and transparent, and the market knows that,” he said.
RMI currently uses the US dollar as is legal tender and the SOV will become its first official fiat currency, albeit in digital form.
SOV will be available first to interested investors internationally, through a planned public sale of pre-SOV units, according to the white paper.
This will involve the sale of 9.6million SOV, to be auctioned gradually as part of a Time-Release Monetary Issuance (TRMI), a process that is expected to begin “soon” and last for 18 months, giving international investors the opportunity to participate when the SOV is officially released.
“The units sold during this introductory period are intended to be exchanged for sovereigns once the sovereign is officially launched,” according to the SOV’s white paper.
While in the white paper RMI has confirmed it will relinquish control over the currency’s money supply, it has listed a number of key entities that will be involved in the governance of SOV.
Among them are the SOV Administrative Authority (SAA), to be created as a unit within the Ministry of Finance and whose role will range from vetting and overseeing exchanges and other identity verifiers to performing Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) functions, the Legal Tender Committee to oversee and guide SOV issuance, allocation and its distribution in the Marshall Islands; and the SOV Development Foundation, which will look after the SOV’s ongoing maintenance and development.
The USD will still circulate and be recognised in RMI when the SOV is launched.