The Marshall Islands is the first country to adopt a sovereign cryptocurrency. Its Sovereign Currency Act 2018 stipulates that the country will issue a digital decentralized currency, which will be used as legal tender for all debts, public charges, taxes, and dues.
According to the document, the Sovereign (SOV) will circulate as legal tender in addition to the US Dollar. The SOV will be introduced via an ICO and will be non-redeemable. All users of the SOV will be required to undergo standard Know Your Customer (KYC) procedures.
The number of SOV units at issuance will be fixed at 24,000,000 units. Prior to the ICO, the Republic of the Marshall Islands will maintain 12,000,000 SOV units. During the ICO, the RMI will sell 6,000,000 of these SOV units. The proceeds from the ICO and the remaining 6,000,000 SOV units owned by the RMI will be allocated to various RMI trust funds.
The supply of SOV units will only grow in accordance with the pre-defined annual growth rate of 4% relatively to the amount of SOV units in existence during the past year. Following the ICO, the residents of the Marshall Islands will be provided with means to hold, save, and conduct transactions with the SOV. Merchants in the Marshall Islands will be provided with access to a mobile and/or personal computer application with which they will be able to receive payments made with the SOV.
This development will mitigate dependence of the Marshall Islands on the US Dollar.
Also, the Marshall Islands is a UN member and a sovereign state, which means the adoption of a legal tender cryptocurrency may have an impact on banks and payment systems worldwide. The Sovereign is the first cryptocurrency in the world that is considered to be legal tender.