An ongoing report from the IMF cautions the little island, the Marshall Islands that its upcoming national cryptocurrency presents a bigger number of dangers than it offers benefits.
A little island country with a populace of around 50 thousand has pulled-in close consideration regarding one of the mainstays of the world economy. The tiny island which picked up freedom in 1986, maybe without precedent for its short history; it got such a considerable amount of attention from the IMF at one go. The Republic of the Marshall Islands (RMI) is little and remote. It is a sovereign country, however, utilizes the US dollar for its national money.
In February 2018, the RMI got an endorsement for the declaration and issuance of the Sovereign Currency, whose goal was to issue decentralized electronic cash based on the blockchain innovation as lawful delicate. As per the report, the new digital currency named the Sovereign (SOV) is expected to be controlled by the Ministry of Finance, which will likewise be in charge of declaring an Initial Coin Offering (ICO).
Then in March, the Marshall Island intended to present a National Cryptocurrency, the Sovereign (SOV). It was to be conveyed to the Islanders, and unique arrangements would incorporate facial acknowledgment created to prevent money laundering. But now, according to an official press release issued by the International Monetary Fund (IMF) on September 10, it warned the Republic of the Marshall Islands (RMI) about the dangers of embracing digital money as a second lawful delicate and carefully consider the macroeconomic and financial stability risks.
As per the report, “The potential benefits from revenue gains appear considerably smaller than the potential costs arising from economic, reputational, AML/CFT, and governance risks. In the absence of adequate measures to mitigate them, the authorities should seriously reconsider the issuance of the digital currency as legal tender.”
In a 58-page report, the IMF warns of US banks refusing to work with Marshall Islands businesses. For all reasons and purposes, this would slice off banking services to the islands’ 53,000 occupants.
The presentation of digital money as payment methods without a robust anti-money laundering (AML) and anti-terrorism guidelines can prompt the nation losing the chance to coordinate with US banks all in all.
The report says,
“The law requires that all users of the SOV undergo standard ‘Know Your Customer (KYC)’ procedures and that their identity is recorded on the blockchain. However, neither the content of the ‘standard KYC procedures,’ nor the modalities of their implementation have been established.”
“Considering the significant risks, staffs recommend that the authorities seriously reconsider the issuance of the digital currency as legal tender.”
The International Monetary Fund also reported that RMI is sensitive to climate change due to its low altitude, and it has repeatedly experienced natural disasters such as drought and floods. The RMI economy is highly dependent on external assistance.
Plans to introduce its own particular crypto money “Sovereign,” the Marshall Islands ended up known in the crypto world. At that point, it was arranged that the new currency will undergo into circulation procedure before the finish of 2018, however, given the specific, clear indications of the IMF, these plans would now be put on hold.