The Country That Bet On Crypto

The Republic of the Marshall Islands is facing rising seas and financial isolation. Can a blockchain currency help—or is it just another problem?

- Joe Light

David Paul looked nervous. He rested his hand over his mouth, fidgeted with his wedding ring, sometimes smiled and sometimes grimaced as the legislature for the Republic of the Marshall Islands debated a motion to oust his boss, President Hilda Heine, from power.

Paul, a top government minister, wore a purple tie and a ribbon on his pocket—the color signaling support for Heine. The tie and dark suit also marked the importance of the occasion in a country where shorts and Hawaiian shirts are standard business attire. One of Heine’s opponents the previous week called for a vote of no confidence. Among the complaints: The president had supported a plan to create the first legal tender cryptocurrency in the world—a digital token called the SOV, for “sovereign.”

If the vote of no confidence passed, most Marshallese expected the opposing senators to repeal the cryptocurrency law. “I knew it was close,” Paul says. “I knew going in it was close.” With one member absent in the 33-member Nitijela, Heine got exactly half the vote, with a tie going to the incumbent. She had eked out a victory. Paul says he never really doubted the outcome.

He might have had reason to worry. The Marshall Islands crypto project, which was largely Paul’s baby, seemed like a good idea until the international finance community responded by threatening to cut off the tiny Pacific island nation from the global banking system. When the Nitijela passed the law authorizing the SOV in February, a Bitcoin was trading for more than $10,000, and someone had just spent 10 times as much for a virtual pet kitten based on crypto technology. But by the time of the no-confidence vote, in mid-November, Bitcoin was worth $6,000, and all kinds of crypto assets were hurting.