How Is the Marshall Islands’ Distinct Governance and Diverse Community Perfect for Cryptocurrencies?

EG 474 How Does the Marshall Islands Sovereignty Connects with Crypto

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Nestled in the vast Pacific Ocean lies a hidden gem – the Marshall Islands, a sovereign nation of 29 atolls and 5 islands that’s a delightful blend of modernity and tradition. With a population of around 53,000, this tropical paradise is located halfway between the stunning Hawaii and mesmerizing Australia. The Marshall Islands boasts a captivating history, a distinct form of governance, and a diverse community that takes pride in its vibrant culture and flourishing economy. But what makes this charming archipelago truly fascinating is its deep connection to the world of cryptocurrency.

History of the Marshall Islands

The Marshall Islands were initially settled by Micronesians around 2,000 years ago. The islands were later colonized by the Spanish in the 16th century, but they did not establish a permanent settlement. In the 19th century, Germany claimed the islands and administered them as part of German New Guinea. After World War I, the islands were given to Japan, which held them until the end of World War II, when the United States took control of the islands.

In 1979, the Marshall Islands gained independence from the United States and became a sovereign nation. Since then, the country has been governed by a presidential representative democratic republic. The government is divided into three branches: the executive, legislative, and judicial branches. The president is the head of state and government, and there is a unicameral legislature.

People and Culture

The Marshallese people are the indigenous people of the Marshall Islands. They are a Polynesian people with a unique culture that is heavily influenced by their history and geography. The Marshallese have a deep connection to the ocean and rely heavily on fishing and agriculture for their livelihoods. They are also known for their traditional dance, music, and crafts.


The Marshall Islands has a mixed economy that is heavily dependent on foreign aid and exports. The country’s main exports are fish, coconut oil, and copra. The government has also recently shown an interest in promoting the country as a tourist destination.

How Did Sovereignty Come About?

The sovereignty of the Marshall Islands came about as a result of its history as a former United States trust territory. After gaining independence in 1979, the Marshall Islands signed a Compact of Free Association with the United States. This compact allowed the United States to provide the Marshall Islands with financial assistance and defense support in exchange for the use of the Kwajalein Atoll as a military base.

Advantages and Disadvantages of Sovereignty

One of the main advantages of sovereignty is that it allows a country to make its laws and regulations. This can be especially beneficial for countries like the Marshall Islands, which have a unique culture and history. Sovereignty also allows a country to enter into international agreements and negotiate with other nations on equal terms.

However, sovereignty can also have its disadvantages. For example, small countries like the Marshall Islands may lack the resources and infrastructure to effectively govern themselves. This can lead to issues with corruption, poor governance, and limited economic growth.

Their Sovereign Currency

The Republic of the Marshall Islands, a small nation in the Pacific, has become known as a “crypto haven” due to its government’s interest in digital currencies. In 2018, the Sovereign Currency Act was passed, declarin

Benefits for Small Nations

The advent of blockchain technology has opened up a world of opportunity for small nations like the Marshall Islands. The decision to issue a currency based on blockchain technology was made to address the challenges faced by small nations in relying on traditional fiat currency. Even simple things like acquiring and installing ATMs become complicated when in the middle of the Pacific Ocean. With blockchain, transactions are fast, simple, and cheap, enabling the Marshall Islands to finally be connected to the global financial system on its own terms.

Decentralized systems have been lived with by the Marshallese people for hundreds of years. For them, centralized solutions aren’t just inefficient, they’re completely unworkable. Blockchain has given them the opportunity to finally acquire monetary independence in a way that reflects Marshallese values, and they intend to grasp that opportunity innovatively and responsibly. The Marshall Islands are being supported by international regulatory bodies to ensure SOV or Marshallese sovereign currency meets all compliance requirements and can be fully integrated into the international financial ecosystem. SOV is being digitally engineered from the ground up to prevent misuse, unlike paper currencies.

Blockchain Technology as the Backbone of the Sovereign Currency

The Marshall Islands decided to base their new currency on blockchain technology because blockchain transactions are fast, simple, cheap, and secure. A decentralized network replicates blockchain transactions, making them more secure. The infrastructure required for blockchain is minimal, as only the network itself is needed. The decision to use blockchain technology was vital for the Marshall Islands, given that many citizens send or receive money using remittance services, paying fees of up to 10% per transaction.

A Predetermined and Tamper-Proof Growth of the Money Supply

The SOV will have a fixed money supply with predetermined and tamper-proof growth. Fiat currencies can be remarkably unstable, and a sustainable growth rate of 4% per year follows the k-percent rule of Milton Friedman. New SOV will be automatically distributed to currency holders and decentralized entities securing the network, preventing government modification of the money supply or the manipulation of the value of the currency through printing more money.

Compliance Baked into the Currency Protocol while Maintaining Privacy for Individuals

Compliance must be baked into the currency protocol itself while maintaining privacy for individuals to enable the currency’s international acceptance. A digital currency based on blockchain can automate much of the compliance burden and enable proactive international engagement. Individuals using SOV must be identified by an approved verifier of their choice, such as a bank or an exchange, to close the secrecy and anonymity loopholes exploited by criminals and terrorists. However, individual users should have a reasonable expectation of privacy, specifically, the ability to choose when to disclose their information, what exactly to share, and with whom.

Current statistics on the economy of Marshall Islands

The Marshall Islands’ economy is largely sustained by US aid and remittances from Marshallese living abroad. The country relies heavily on imports, with food and fuel being the main imported items. The economy of the Marshall Islands experiences seasonal fluctuations in employment due to its small tourism sector.

According to the World bank Blog on the Gross Domestic Product (GDP) in Marshall Islands was worth 0.26 billion US dollars in 2021, according to official data from the World Bank. The GDP value of Marshall Islands represents less than 0.01 percent of the world economy.

According to projections, the Marshall Islands’ gross domestic product in current prices is expected to see a steady rise from 2023 to 2028, resulting in a total increase of 0.1 billion U.S. dollars, equivalent to a growth rate of 34.48%. By the end of 2028, the GDP is predicted to reach 0.35 billion U.S. dollars. 

This economic indicator measures the country’s GDP at current prices, as per the definition provided by the International Monetary Fund. The figures are based on the value of the GDP in the local currency, converted into U.S. dollars using the yearly average market exchange rates. The GDP reflects the total value of all final goods and services produced by a country in a given year.

Projections on the future of Cryptocurrency in the Marshall Islands

As of now, there are no concrete projections on the future of cryptocurrency in the Marshall Islands. However, it is worth noting that the government of the Marshall Islands has previously announced its intention to launch its own digital currency, called the Marshallese sovereign (SOV).

The SOV is intended to be the country’s official currency, alongside the US dollar, and will be based on blockchain technology. The government aims to use the SOV to facilitate financial transactions and provide greater financial inclusion for the unbanked population of the Marshall Islands.

While the launch of the SOV has faced some delays, the government remains committed to its implementation. If successful, the SOV could potentially have a positive impact on the country’s economy, particularly in terms of reducing transaction costs and improving financial access for its citizens.

It is also possible that other forms of cryptocurrency may gain popularity in the Marshall Islands in the future, as they have in other parts of the world. However, this remains to be seen and will 

depend on a variety of factors, including government regulations and public acceptance.

The Republic of Marshall Islands has taken a significant step towards becoming a global hub for the incorporation of decentralized autonomous organizations (DAOs) by recognizing them as legal entities. With this move, DAOs registered in the Marshall Islands can now enjoy the same privileges as limited liability corporations, granting them corporate personhood and the ability to hold real estate. The Marshall Islands is the first sovereign nation to recognize DAOs as legal entities, potentially setting a precedent for other nations.

Advantages for DAOs

DAOs that incorporate in the Marshall Islands no longer have to register separate LLCs to operate, simplifying the registration process and making it easier to maintain decentralized decision-making processes. The first DAO to test the new legislation is Admiral DAO, which has registered its company, Shipyard Software, a decentralized exchange software developer, under Marshall Island jurisdiction.

The Marshall Islands offers several advantages for DAOs looking for a domicile, including not being subject to U.S. federal laws while still having access to U.S. Postal Services, Federal Aviation Administration, and the U.S. Military. The islands are hoping to become a hotbed for DAOs, in the same way that Delaware has become a mainstay for U.S. business incorporation.

Potential Challenges

Although the Marshall Islands’ new legislation is a positive step for DAOs, there may still be regulatory hurdles to overcome. The nation’s initial attempt to launch a digital currency failed due to regulatory obstacles. DAOs looking to incorporate in the Marshall Islands may also face regulatory scrutiny from other nations, which may not recognize DAOs as legal entities.

The Republic of Palau, another island nation located in the Pacific Ocean, launched the first digital residency program in January, allowing people from around the world to apply to become digital residents of the country. Palau is also working on launching its own stablecoin later this year.


The Marshall Islands, a sovereign Pacific nation comprising 29 atolls and five islands, boasts a distinctive history, governance, populace, culture, and economy that significantly contribute to its relationship with cryptocurrency. Having gained independence in 1979 after being a former United States trust territory, the island nation signed a Compact of Free Association with the US, receiving financial aid and defense support in return. This sovereignty empowers the Marshall Islands to create its own laws and regulations, engage in international agreements, and negotiate with other countries on equal footing.

However, this sovereignty has also positioned the Marshall Islands as a “crypto haven,” thanks to its government’s interest in digital currencies. To tackle the challenges faced by small nations dependent on traditional fiat currency, the Marshall Islands passed the 2018 Sovereign Currency Act, announcing its intention to launch a new digital currency called the Marshallese sovereign (SOV) using blockchain technology. Blockchain transactions are fast, simple, inexpensive, and secure, which makes them an appealing option for small nations like the Marshall Islands. The SOV will feature a fixed money supply with predetermined, tamper-proof growth while ensuring compliance with currency protocol and maintaining individual privacy. This innovative use of blockchain technology presents a wealth of opportunities for small nations to thrive in the global financial landscape.


What is the connection between the Marshall Islands sovereignty and crypto?

The Marshall Islands issued its own digital currency, the Sovereign (SOV), in 2018. This move towards creating a national cryptocurrency is seen as a way for the Marshall Islands to assert its sovereignty and move away from reliance on the US dollar.

How did the Marshall Islands come up with the idea to create their own cryptocurrency?

The Marshall Islands government partnered with Israeli fintech company Neema to create the SOV. The decision to create their own cryptocurrency was driven by the country's limited access to international banking services and a desire to develop a more robust financial system.

What is the status of the SOV?

The SOV is currently in development and has not yet been officially launched. The Marshall Islands government is working with Neema to create the cryptocurrency and establish a legal framework for its use.

How will the SOV be used?

The Marshall Islands government intends for the SOV to be used as legal tender within the country, alongside the US dollar. It is hoped that the SOV will provide greater financial inclusion for Marshall Islanders who are currently underserved by traditional banking systems.

What are the potential benefits and risks of the SOV?

The benefits of the SOV include greater financial inclusion for Marshall Islanders, reduced reliance on the US dollar, and potential for economic growth through increased investment. However, the risks include the potential for the SOV to be used for illicit activities and concerns over the stability of the cryptocurrency market.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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