Marshall Islands President Hilda Heine is under fire and is facing a vote of no confidence amid a bold plan led by her administration to introduce a national cryptocurrency dubbed the Sovereign (SOV).
The vote will reportedly occur next week after a group of eight senators including Senator Casten Nemra introduced the motion on Monday with 50 sitting days remaining in this year’s parliamentary session. The Republic of the Marshall Islands, which is located about halfway between Hawaii and Australia, set the wheels in motion earlier this year for its own digital currency as a legal tender to compete with the U.S. dollar.
The launch of a national digital currency was meant to be historic for the independent Pacific island, as they planned to use the proceeds from the issuance of 24 million SOV tokens in an ICO to bolster the economy. They even engaged Israeli startup Neema to help develop the SOV and run the token sale, a partnership that is also now seemingly in jeopardy.
The plans first appeared to be unraveling with the International Monetary Fund (IMF) indicating that the issuance of a national digital currency would do more harm than good to the local economy followed by the upcoming debate and vote of no confidence among Parliament, which is scheduled for Nov. 12.
According to Radio New Zealand News, the vote could go either way, as the 33 members of Parliament are basically split down the middle in their support of the president.
Ax to Grind
While concerns surrounding the national cryptocurrency may be understandable in light of the IMF’s warning that the SOV could “increase macroeconomic and financial integrity risks, and elevate the risk of losing the last U.S. dollar correspondent banking relationship,” political motivations could be at play.
Senator Nemra, who is leading the charge against President Heine and her crypto plans, served as president of the Marshalls briefly prior to being ousted and replaced by President Heine after a no-confidence vote that didn’t go Mr. Nemra’s way. Meanwhile, the senators who are opposing President Heine are reportedly in favor of a separate bill to create an “investor haven” in the Marshalls that was rebuffed by the current administration.
Chief among the criticisms of the senators behind the motion is the SOV, with Senator Nemra suggesting that the plans for a national cryptocurrency have damaged the reputation of the Marshalls. Meanwhile, the senators are also unhappy with the way the president has treated “outsider islands”, which they allege has been “unequal.” Under President Heine’s leadership, however, the Marshall Islands has been the recipient of robust grant funding to the tune of $100 million-plus in projects with the World Bank.
The SOV could either set a precedent for other national currencies or it could be one step forward, two steps back for the trend.