DEZRA proponents fire back

Rongelap Atoll Local Government to promote the DEZRA plan named its Constitution Day basketball team DEZRA, and the players sports DEZRA on their uniforms during the competitions. Photo: Wilmer Joel.

Digital currency proponent David Paul, who represents Kwajalein in Nitijela, says there is a double standard involved in the criticism of the DEZRA plan by American financial experts.

CEO of the US-based Financial Services Volunteer Corps J. Andrew Spindler issued a two-page critique of the Digital Economic Zone for Rongelap Atoll (DEZRA) to RMI Banking Commissioner Sultan Korean in late April. He slammed the DEZRA plan, quoting one member of the FSVC group as saying about DEZRA “it is hard to describe how bad this is.” They contend that the DEZRA plan is an “invitation to unscrupulous activities” that would damage the RMI government’s reputation with international banks and other financial institutions.

But Paul suggested there is a double standard in this criticism from Spindler. Paul noted that Spindler is engaged in work similar to what DEZRA is promoting in his work for the Dubai Financial Services Authority. “Perhaps they don’t want competition from the Marshall Islands,” Paul said, adding “some people don’t want us to be financially independent.”

Further, Paul said that the DEZRA plan is proposing to establish a digital financial operation that is unique in the world today. “We plan to bring in the right people to do it,” he said. Paul referred to the CEO of the US Guidepost Solutions firm that is engaged in investigations, compliance and security operations for private sector companies globally. Guidepost was engaged by promoters of the SOV digital currency to work on developing financial compliance systems for the SOV that satisfy US Treasury and other international standards.

Paul described Guidepost CEO Julie Myers Wood as a “very reputable” individual in the compliance world and said the DEZRA team was aiming to engage her and her team in developing the DEZRA plan.

In a May 11 letter to Finance Minister Alfred Alfred, Jr., Banking Commissioner Sultan Korean, and Rongelap Mayor James Matayoshi, Myers offered the services of her Guidepost firm “to be considered as an independent third party to build, implement and execute a financial crime compliance structure for the DEZRA jurisdiction.”

Myers pointed out that in her experience, “creating and implementing a state-of-the-art compliance framework — especially in the digital age — should be outsourced to an independent and reputable third party. I believe that Guidepost Solutions has the appropriate credentials to serve in that role.”

Although regulators have traditionally been unsure about digital currencies, “a strong compliance framework surrounding the technology can go a long way to regulatory acceptance,” said Myers.

In other DEZRA and digital currency news:

• Nitijela Speaker Kenneth Kedi, speaking to the Journal, said that letters “from the other side” criticizing the DEZRA plan were based on a negative evaluation of DEZRA issued by the Ministry of Finance.

But, said Kedi, the Finance report and the negative comments are not relevant to the latest version of the DEZRA legislation. The Digital Economic Zone for Rongelap Atoll “will follow the letter of the law,” including appointment of a DEZRA Commissioner by the Cabinet.

He labeled the responses of various US government and bank-related officials as “nonsense based on the Ministry of Finance (report) and the original bill.”

• Global crypto-currency markets lost over $1 trillion in value since May 19, emphasizing the extraordinary volatility in the digital money market, according to multiple news reports.

“On Wednesday, a broad crypto crash wiped out about $1 trillion in market value — a staggering drop from $2.5 trillion just a week ago,” report CNN Business. “Bitcoin, which accounts for more than 40 percent of the global crypto market, nosedived 30 percent to $30,000 on Wednesday, its lowest point since January.”

Forbes reported at the weekend that the “crypto crash” was intensifying, with losses hitting $1.3 trillion “just two weeks after (the) market’s all-time high.”

“The cryptocurrency market’s massive crash worsened Sunday as a wave of crackdown measures in China continues to rattle investor sentiment, pushing losses to more than $1.3 trillion since a market peak on May 12, the day billionaire Elon Musk announced on Twitter that Tesla would no longer invest in or sell bitcoin due to its hefty environmental cost,” reported the business magazine Forbes.

CNN Business said Musk “walking back” his earlier commitment for Telsa to accept bitcoin payments caused a 12 percent drop in bitcoin value on May 12. This was followed May 19 by Chinese authorities announcing a crackdown on crypto use in the country.

“The threat of increased regulation triggered a panic, and bitcoin plunged before rebounding slightly and leveling off,” reported CNN Business, which labeled the over $1 trillion crash “a staggering drop,” adding “stomach churning moments are part of the experience when you buy a ticket to the crypto circus.”

CNN reported that believers in crypto-currency “tend to take the long view: At the start of 2020, bitcoin was trading around $7,000 a coin, which means it’s still up more than 400 percent in that time, even after crashing this week.”

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