
Marshall Islands warned against adopting digital currency - farseer
https://www.bbc.com/news/technology-45485685
======
EE84M3i
You can download the full report from the IMF here:
[https://www.imf.org/en/Publications/CR/Issues/2018/09/10/Rep...](https://www.imf.org/en/Publications/CR/Issues/2018/09/10/Republic-
of-the-Marshall-Islands-2018-Article-IV-Consultation-Press-Release-Staff-
Report-and-46216) This is an ARTICLE IV CONSULTATION which is a type of report
the IMF publishes about each country each year.

The Marshall Islands are obviously a relatively small market, and the IMF
devotes a chunk of their report to the new currency and the risk of losing
their correspondent banking relationship (CBR) in the section "PROTECTING
FINANICAL STABILITY" which is 3-4 pages (starting on page 6)

I recommend you read it yourself. The IMF's primary concerns seem to be AML
issues and the prior existing risk to their CBR, which amount to a large
amount of risk for such a small country to take on. Note the Marshall Islands
are part of the Compact of Free Association with the US and are highly
dependent on the US for almost everything, so having a falling out with the US
would be _really bad_ for them.

Maybe I haven't drank enough kool-aid but I'm unconvinced this is the IMF
making threats (it's not like the IMF really has any power anyway) and more
them advising the Marshall Islands that they're likely in dicey territory with
the US regulators and that that is a substantial risk to their economy.

~~~
anonymous5133
The IMF report is overly biased because it does not take into account the
benefits that the Marshall islands could obtain from being an economy with a
crypto official currency. For example, having a crypto official currency would
eliminate currency controls and could encourage new economic activity on the
island.

The Marshall islands is desperate for solutions to grow their economy so they
have very little to actually lose if they do adopt it. The IMF report does not
reflect this.

~~~
eli
"biased" doesn't mean the same thing as "I disagree with the conclusion and
methodology"

------
nhumrich
I lived in the Marshall Islands for two years. AMA.

My current thoughts are that of all countries to adopt crypto, MI makes little
sense. Only on the main island do people have cell phones. Smart phones are
even less common. Internet is a rare commodity. On the outer island, they
barely have a reliable mail system. Electricity is pretty much non existent.
They get their power by using solar panels to charge car batteries. They use
those to power tvs and such. But internet and phone's, etc, are completely non
existent on the outer islands. That being said, some islands already have a
"ledger", where the people themselves never actually have money, they just
earn "credits" and can make orders with them. The ledger is mostly a trust
based system with the "lord". So a public, immutable ledger here would be
cool, but they lack the culture and technology to have that everywhere.

~~~
jpatokal
It makes perfect sense if you look at this as a get-rich-quick scheme: brand
as first ever sovereign cryptocurrency, launch IPO, mint money.

And I'll take you up on your kind AMA offer: _why_ would you live there for
two years?

~~~
nhumrich
I was volunteering for my church to spread the gospel and help the people.

------
noobermin
People need to understand, the Marshalls is a _small_ country, consisting of
less than a hundred thousand of people. The islands in the Micronesia are
small, isolated, and can hardly sustain themselves without foreign aid. I had
never heard this till now even though my parents are from a nearby island.

I did some searching, and the only thing I could find in articles about it
were quotes from the CEO of Neema and quotes from politicians. Not a single
quote from any normal person on the street and whether they think its a good
idea or even know what's going on. It smells very fishy to me.

Finally, I'll say, I don't have the kindest opinion of the IMF, but adopting a
potentially volatile cryptocurrency and thinking they'll be able to augment
their internal commerce with it is ill-fated.

~~~
true_religion
> Not a single quote from any normal person on the street and whether they
> think its a good idea or even know what's going on.

I never really expect to hear normal, man-on-street, type folk queried about
international monetary policy.

Personally, I don't think my few semesters of economics qualify me to discuss
the economic impact of a US Federal Reserve decision. In a democratic
government, we have to trust that the powers which we elect, have placed
suitably expert people into the bureaucracy and act accordingly to their
advice.

~~~
noobermin
There are 50K people in the Marshalls. Imagine a rural town in the US decided
to do something like this[0]. Wouldn't the strangeness of the arrangement with
the small size of the city prompt a reporter to ask a random farmer or guy on
the street? That would be the first thing I'd imagine. Regardless, I get it,
unlike a small town, you can't really just ship your reporter on a road trip
there without buying a $3K ticket, I'm just hinting that it's hard to tell
whether people on the ground are really aware this is going down from just
reading about it.

Regarding the politicians it's very possible that the policy makers were sold
a one sided perspective on this. People in the pacific just don't have access
to information that people elsewhere do. That said, I'm not Marshallese, so I
don't know the circumstances of the vote so I'm assuming a lot here. I've just
seen a similar script play before in Palau and it usually doesn't turn out
well.

[0] Of course, cities can't issue their own currency practically, so the
analog doesn't really work.

------
mmastrac
> "The IMF is not strong-arming the Marshalls, what they're doing is
> describing what will obviously happen if they proceed - the large
> correspondent bank will be quite worried," he added.

This guy really is an expert at "no really this isn't a threat wink wink".

~~~
onetimemanytime
Sometimes people are just worried for others...like: "You have a nice store,
it would be a shame if it burned down" :)

~~~
dwighttk
how are you supposed to express that sentiment without it sounding like a
threat?

~~~
etatoby
You don't. Because that's what it is.

------
AlexMuir
> In 2014 Barak [CEO of this Sov coin] founded Neema, a Y-Combinator company
> focused on easy, fast and secure money transfers for the unbanked.

Can anyone shed any light on Neema? It seems to be the forerunner to this.
Very unusual for a YC company - it has almost no coverage on HN whatsoever -
just two mentions that I can find in the search.

~~~
tim333
Their app in on the appstore but has no reviews. I guess they didn't get much
traction?

------
Maybestring
>There is just one domestic commercial bank in the country and it is at risk
of losing its only correspondent banking relationship with another bank in the
US.

Is that a statement of fact, or a threat the IMF is making?

------
savethefuture
However, IMF directors said the potential benefits of the move were much
smaller than the potential costs of "economic, reputational and governance
risks".

Who is really in charge?

~~~
etatoby
The ones who own stuff.

------
omegaworks
Many in the cryptocurrency space throw around the "currency is not real" and
"currency only has value because we believe it does." These cliches betray an
ignorance of the very real power relationships at play in the space.

The strength of the US dollar is supported not just by the imaginations of its
users, but by the political and trade relationships made and sustained by the
will of the US government.

This is just one small example of the weight thrown around when the dominance
of the dollar is threatened.

------
krupan
When I saw the headline here my first question was, which crypto currency? Are
we now lumping all crypto currencies together, when the broad category of
"crypto" contains everything from Bitcoin to dogecoin to proposed ERC20 coins
that only exist on paper? I too would warn _everyone_ against using certain
crypto coins for _anything_

------
m3kw9
And how do you suppose to teach these people how to use it? On the opposite
side, you can lose it very easily.

------
yasp
Such risks as "being able to devalue one's currency" ?

A public ledger provides greater protection against money laundering and other
criminal activities than a paper currency does.

~~~
badge

      A public ledger provides greater protection against 
      money laundering and other criminal activities than a 
      paper currency does
    

This is not true, especially when it comes to larger amounts.

For example, laundering millions of dollars in cryptocurrencies was easily
achieved though services such as ShapeShift which up until recently had no
KYC/AML paper trail. If someone wants to launder millions of dollars in
physical cash, they would need a business acting as a "front" which could be
scrutinized to an audit.

    
    
      The Bitcoin network allows anyone to move millions of 
      dollars across the world without any in-person 
      meetings, and without the approval of any financial institutions. 
    

[https://www.nytimes.com/2018/07/13/technology/bitcoin-
russia...](https://www.nytimes.com/2018/07/13/technology/bitcoin-russian-
hacking.html)

    
    
      The Russians also created Bitcoins themselves through 
      the process known as mining, the indictment said. 
    

This detail is particularly interesting, because if we assume state sponsored
spies with a technical understanding of how the internet and the Bitcoin
protocol works, that this sort of transaction _could_ be untraceable to the
source and so it would be safe to assume their operation was discovered though
other forensics outside of blockchain records.

~~~
npongratz
> ... laundering millions of dollars in cryptocurrencies was easily achieved
> though services such as ShapeShift ...

I'd like to request a source on that. It was my understanding that ShapeShift
limited trade sizes, so moving large amounts was difficult, impractical, slow,
and exposed to a lot of market value risk.

~~~
badge
Any basic search within the Bitcoin community and you'll find many many guides
and services for Bitcoin money laundering:

[https://old.reddit.com/r/CryptocoinMixing/](https://old.reddit.com/r/CryptocoinMixing/)

[https://bitcointalk.org/index.php?topic=436467.0;all](https://bitcointalk.org/index.php?topic=436467.0;all)

[https://darknetmarkets.org/a-simple-guide-to-safely-and-
effe...](https://darknetmarkets.org/a-simple-guide-to-safely-and-effectively-
mixing-bitcoins/)

[https://ethereum.stackexchange.com/questions/2699/is-
there-a...](https://ethereum.stackexchange.com/questions/2699/is-there-any-
ether-mixer-tumbler-available)

Vitalik Buterin himself has attempted a money laundering feature into the
Ethereum Virtual Machine codebase:
[https://github.com/ethereum/serpent/blob/develop/examples/ec...](https://github.com/ethereum/serpent/blob/develop/examples/ecc/ringsig.se)

Another famous way to launder money as described in this post from a moderator
on BitcoinTalk dated August 22, 2013, 02:32:31 AM [
[https://bitcointalk.org/index.php?topic=279249.0](https://bitcointalk.org/index.php?topic=279249.0)
] , is to give Bitcoin to a mining pool in return for renting their hashpower,
in return for freshly minted coins:

[https://www.nicehash.com/buy](https://www.nicehash.com/buy)

~~~
npongratz
Please forgive me if I'm being dense, but I was asking for a source to the
claim that ShapeShift (in particular, since you singled them out above) could
"easily" be used to launder "millions of dollars." After reading through these
links, I'm still not convinced. Only one link you listed mentions ShapeShift,
which to some credit, suggests a theoretical, many-step, multi-blockchain
process for using ShapeShift in such a way.

My understanding still hasn't changed that "moving large amounts [with
ShapeShift before AML/KYC] was difficult, impractical, slow, and exposed to a
lot of market value risk," but I'm interested in evidence to the contrary.

~~~
badge

      Sealioning (also spelled sea-lioning and sea lioning) is 
      a type of trolling or harassment which consists of 
      pursuing people with persistent requests for evidence or 
      repeated questions, while maintaining a pretense of 
      civility so as to discredit their target
    
    

ShapeShift was setup without any KYC/AML or login, thus it facilitated
automation.

More obviously, the entire ecosystem is designed for money laundering. As
evident the previous post, and any rudimentary search will turn up countless
results on services or guides on using native wallet apps for Bitcoin or
Monereo to mix and launder wallet addresses.

