Marshall Islands, a tiny country located in the central Pacific Ocean, has set up an independent development fund for SOV, its national digital tender. The fund will finance development of the cryptocurrency and be responsible for its implementation and infrastructure maintenance. The country already uses the US dollar as legal tender and is attempting to become the world’s first economy to have a legally-compliant cryptocurrency in its economy.
According to David Paul, the Minister in Assistance to the President, SOV will help Marshall Islands achieve sustainable development and climate change goals. “We are designing SOV in a way that will not place any burden on the government’s finances. The currency funds itself,” he said in a pre-recorded message at the recently-concluded Blockchain for Impact conference at the United Nations. Approximately fifty percent of overall SOV issuance has been earmarked for the fund. Thirty percent of the initial issuance of SOV will be diverted to the fund. Another 20% will be set aside for “short term development” of the fund, meaning it will be distributed among investors, developers, and advisors of the cryptocurrency.
Most cryptocurrencies are governed by independent foundations responsible for various tasks associated with development, implementation, and building a community related to them. For example, Ethereum’s Foundation is based in Switzerland. Facebook is in talks with financial institutions and tech companies to help set up a foundation for Globalcoin – its cryptocurrency.
According to a press release issued yesterday, the SOV fund will have a board of seven directors. Two directors will be nominated by the government and another two will be from SFB technologies, the firm contracted by the government to develop SOV. The remaining three members will be “luminaries” in blockchain, banking, and monetary management, nominated by the existing members. The project already boasts the services of Dr. Peter Dittus, former secretary general of the Bank of International Settlements (BIS).
In a conversation with online publication The Block, Barak Ben-Ezer from SFB technologies explained that the goal was to create a special economic zone (SEZ) that used SOV. “The more the special economic zone grows, the more the SOV will grow. The more the SOV grows, the more funds we will have in the special development fund to support the ecosystem,” he said. Future plans for the cryptocurrency include open-sourcing its code to enable other small countries, such as Monaco, to develop their own versions of the crypto.
An explainer for SOV also references high remittance fees for money transfers of 10% as another reason to introduce SOV into the country’s economy. Issuance of SOV to citizens is expected to begin in 2021.