Having launched its digital currency, the Sand Dollar, in December 2019, the Bahamas could reach a new milestone by becoming the first country to roll out a sovereign digital currency to neighboring islands. The public release is slated to happen in October.
Citing sources close to the matter, Bloomberg reported the development latest development, which is set to make it simple for islands surrounding the Bahamas to settle transactions using the new digital payment solution. The inhabitants of those islands have little or no access to banking platforms or even digital payment solutions.
Commenting on the new payment solution, the assistant manager of Solution at the Central Bank of the Bahamas, Chaozhen Chen, said that the apex bank “had to customize the effort and the solution to what we need as a sovereign nation.”
At this time, only $48,000 worth of Sand Dollar (pegged to the Bahamian dollars) is on the central bank’s balance sheet.
Upon setup, the Sand Dollar payment solution service will be made available on mobile devices. Even when users are offline, they can still have access to run their business transactions. The user experience might reportedly vary slightly for already existing customers.
Meanwhile, transaction facilitators in the likes of payment services providers (PSPs) will pose as a ‘go-between’ for the ease of utilizing the Sand Dollar as a means of settling a transaction or debt.
Speaking on how The Bahamas’ regulatory policy will support the acceptability of the Sand Dollars, the head of technology at Island Pay, a PSP firm, said: “The Bahamas is laying the groundwork for how it could be done throughout the Caribbean.”
Unlike fiat-backed dollars used in the crypto space, Chen said that The Bahamas would only mint new units of the Sand Dollar in the future to meet with growing demand. The digital currency project will not give room for its populace to illegal activities often found in the crypto space.
For instance, the digital currency will be subject to the same anti-money laundering (AML) and know-your-customer (KYC) policies associated with traditional bank accounts.
In such a manner, the Sand Dollar differs from existing digital currencies like Bitcoin (BTC) and Ether (ETH), which does not have a direct link to fiat currencies and cannot be traced to a particular holder.
Author: Ruth Shadrac