The Marshallese parliament initially endorsed the creation of the national digital currency, which would be called the Sovereign (SOV), in February of this year. Set to be issued before the end of 2018, the SOV would be used along with the U.S. dollar, which the country uses as its official currency. Heine said then that the introduction of the SOV is “another step of manifesting our national liberty.”
On Monday, a group of eight senators reportedly introduced a vote of no confidence in the Heine administration. The Marshallese constitution requires that a vote is held between five and ten days after a no confidence motion is introduced in the country’s parliament, the Nitijela. The motion — which must pass by a simple majority — was introduced on the last of 50 sitting days of this year’s parliamentary session.
In the vote, former president Casten Nemra stated that the plans of establishing a digital currency as legal tender had a negative impact on the reputation of the country. The plan, according to Nemra, also resulted in criticism from major financial organizations, including the International Monetary Fund (IMF) and the U.S. Treasury Department.
In September, the IMF warned the government of the Marshall Islands about the risks of adopting a cryptocurrency as a second legal tender, stating that it will pose risks to the country’s financial integrity, as well as relationships with foreign banks. The IMF also urged Marshallese authorities to reconsider issuing a digital currency until the government is able to provide and implement “strong policy frameworks.”
Another factor in the senators’ vote of no confidence is the proposal for a special investor haven, which authorities from Rongelap Atoll made earlier this year. The Heine administration rejected the proposition, saying that the offer violated a number of laws and international financial agreements between the Marshall Islands and other countries. Notably, the same group of senators who introduced the no confidence motion in Heine also support the formation of the Rongelap Atoll Special Administrative Region.
Heine’s announcement regarding the introduction of the state digital currency came at the same time that Venezuela launched a national cryptocurrency called the Petro. The currency was purportedly designed to skirt the U.S. and E.U. sanctions that negatively impacted the country’s economy. Venezuelan president Nicolás Maduro subsequently announced the launch of a Petro-funded crypto bank to support initiatives from youth and students.