Governor Vetoes Tinian's USD-Pegged Stablecoin Bill

The governor of the Northern Mariana Islands has vetoed a bill that would have allowed the local government of Tinian to issue its own USD-pegged stablecoin. In an April 11 letter, Governor Arnold Palacios cited several legal issues and potential unconstitutionality as reasons for the veto. The bill, which primarily dealt with issuing licenses to internet casinos, included a provision for the Tinian treasurer to manage and redeem a "Tinian Stable Token." This token, known as the Marianas US Dollar (MUSD), was intended to be fully backed by cash and US Treasury bills held in reserve by the Tinian Municipal Treasury.

The bill was introduced by Republican Senator Jude Hofschneider and passed unanimously by the Tinian delegation to the Marianas legislature on March 12. However, Governor Palacios expressed concerns about the bill's aim to regulate an industry that could cross jurisdictional boundaries, noting the lack of robust enforcement measures to prevent illegal gaming activities. The veto means that Tinian will not be the first US government entity to issue a stablecoin, a distinction that Wyoming had been aiming for, with its own stablecoin expected to launch in July.

The proposed stablecoin was set to launch on the eCash blockchain, a network that rebranded from Bitcoin Cash ABC in 2021. The launch was planned to coincide with Google's $1 billion plan to route fiber-optic subsea cables from the mainland US through Tinian and onto Japan, aiming to improve internet connectivity. The tech services firm Marianas Rai Corporation, based in the Commonwealth’s capital of Saipan, was chosen to provide the infrastructure for issuing and redeeming the MUSD and developing its ecosystem.

The veto highlights the complex legal and regulatory challenges associated with issuing stablecoins, particularly in a jurisdiction with limited resources and a small population. Tinian, with just over 2,000 residents, relies heavily on tourism, and the stablecoin was seen as a potential economic boost. However, the governor's concerns about legal issues and enforcement measures underscore the need for careful consideration and robust regulatory frameworks when introducing new financial instruments.