Governor of Northern Mariana Islands, Stablecoin issuing bill rejected...“Concern about regulations exceeding jurisdiction”

The regional stablecoin issuance plan promoted in the Northern Mariana Islands was halted by the governor's veto. This bill contained provisions to allow online casino licenses while enabling the local government to issue its own cryptocurrency linked to the dollar.

According to a letter from Arnold Palacios, Governor of the Northern Mariana Islands, released on April 11, he vetoed the bill, stating, “There are several legal issues, and there is a possibility of it being unconstitutional.” Governor Palacios particularly took issue with the fact that this bill attempts to regulate industries that are difficult to confine to a single region. He also pointed out the lack of sanctions to prevent illegal gambling.

The bill was centered around allowing an internet-only casino license in the small island area of Tinian in the Northern Mariana Islands and granting the region's treasurer the authority to issue and manage the 'Tinian Stable Token'. Tinian is a tourist-centered area with about 2000 residents, administered by an independent local government.

This legislation was led by Republican Senator Jude Hofschneider in February, and on March 12, the Tinian delegation in the Northern Mariana Legislature unanimously passed the bill. This raised the possibility that Tinian might become the first region to issue a dollar-linked stablecoin in U.S. territory.

Prepared under the name 'Marianas US Dollar (MUSD)', this stablecoin was set to be fully backed by cash and U.S. treasury bonds, with issuance and management to be handled by the Tinian Treasury. The technical infrastructure was to be solely handled by Marianas Ray Corporation, headquartered in Saipan, the capital of the Northern Mariana Islands, and MUSD was to be issued on eCash blockchain. eCash is a network rebranded from former Bitcoin Cash ABC.

Governor Palacios exercised veto power over the entire bill but avoided explicit mention of the stablecoin itself. Instead, he highlighted the limitations of regulating the digital finance industry, which crosses jurisdictional boundaries, at the local government level.

This decision is seen as another instance revealing that the legal and institutional boundaries surrounding cryptocurrencies and digital assets in the United States are still not sorted out.