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Marshall Islands Passes Bill To Adopt SOV As State Digital Currency

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The Marshall Islands passed a bill to adopt the Sovereign (SOV) as the island nation's national digital currency.

Only two countries in the world have adopted cryptocurrency officially.

The first one is Venezuela, which last year launched its own cryptocurrency - Petro - backed by crude oil reserves.

Neema, an Israel-based company, is partnering with the Marshall Islands government to develop the digital currency. It will be in charge of issuing the currency, and will receive half of the initial SOV issuance.

The cryptocurrency will have equal status with the U.S. dollar as a form of payment in the Marshall Islands.

The Times of Israel reported that SOV users will be required to reveal their identity, and buyers will be checked against the U.S. Office of Foreign Asset Control.

Neema's CEO Barak Ben Ezer wasd quoted as saying that an SOV initial coin offering is being planned "once all stakeholders are convinced that SOV is ready, risks have been mitigated, and momentum is building."

The Pacific island nation of 53,000 currently uses the U.S. dollar as its legal tender, and are highly dependent on U.S. grants.

The Marshall Islands is proceeding with the issuance of its own cryptocurrency ignoring warning by the International Monetary Fund (IMF) to "seriously reconsider" the move.

The issuance of a decentralized digital currency as a second legal tender in addition to the U.S. dollar would increase macroeconomic and financial integrity risks, and escalate the risk of losing the last U.S. dollar correspondent banking relationship, IMF said in a report in September.

IMF warned that US banks will refuse to work with Marshall Islands businesses if the national crypto is adopted, thus cutting off banking services to the islands' residents.

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