Part 4 of 7: Financial Access and the Path to USDM1
The Journey to USDM1 (2015–2025)
The RMI has been closely evaluating blockchains as secure mechanisms for transferring value, and considering their potential to lower the costs of financial access for the Marshallesse people, for many years.
As early as 2015, global public-policy discussions began to consider blockchains as foundational infrastructure. By 2017, governments around the world were testing blockchains as emerging technologies to lower costs and improve public-service delivery. In Sweden, the Netherlands and the United Arab Emirates, land-registry pilots were launched focused on using blockchain platforms to create tamper-proof records, reduce administrative costs and improve access to property rights.
In 2017, as regional correspondent banks began withdrawing from the Pacific, the RMI explored a blockchain-based currency called the SOV as a possible response to emerging financial-access pressures. The government presented the concept to the IMF, World Bank, U.S. Treasury and its banking partners. These institutions cautioned the SOV would function as a free-floating, parallel digital currency in a fully dollarized economy. This had the potential to introduce volatility that could undermine, rather than enhance, financial access. At that time, regulations governing “virtual assets” relied on dated case law and ad hoc enforcement rather than coherent frameworks, and global AML/CFT standards for digital assets were incomplete. Given these gaps, the RMI tabled the SOV proposal and repealed related authorizing legislation. However, the initial inquiry and subsequent process highlighted the promise of blockchain technology, broadened administrative understanding of its uses and implementation, and clarified the requirements for responsible future adoption.
Modernization of Regulatory Frameworks
The RMI continued a path of research, institutional development and regulatory alignment as blockchain technology matured. Earlier in the decade, the RMI integrated successive rounds of FATF guidance on virtual assets and virtual-asset service providers into domestic law. Soon after, blockchain-based compliance and supervisory capabilities were added to the Office of the Banking Commissioner and the Financial Intelligence Unit.
Capacity-Building
Drawing on its long-standing expertise in corporate and shipping registration – and supported by its commercial statutes modeled on Delaware law, with Delaware non-statutory law incorporated by reference for non-resident corporations and widely used as persuasive precedent in domestic corporate matters – the RMI entered into a public-private partnership to establish a corporate registry for DAOs.
This registry brought entity-governance functions on-chain, replacing paper-based operating agreements with blockchain-based agreements. In subsequent years, related laws and regulations have enabled more than 300 DAO LLCs to register in the RMI. Successful RMI implementation of these initiatives has required technical training alongside adoption and regular use of blockchain-based compliance and supervisory tools.
These operational experiences provided RMI government agencies with practical familiarity and laid a responsible foundation when new opportunities emerged to utilize blockchain for the benefit of the Marshallese people.