Governor vetoes Tinian stablecoin bill over legal concerns

Northern Mariana Islands Governor Arnold Palacios has vetoed a bill that would have allowed the island of Tinian to launch its own USD-pegged stablecoin, citing legal and constitutional concerns.

The decision halts what could have been a pioneering initiative in U.S. territories.

The legislation, introduced in February by Senator Jude Hofschneider, sought to amend local laws to permit internet-only casino licenses and included a provision for the issuance of the "Tinian Stable Token" (MUSD).

The stablecoin was designed to be fully backed by cash and U.S. Treasury bills, with the Tinian Municipal Treasury managing its reserves.

The bill passed unanimously in the Tinian delegation on March 12.

In an April 11 letter, Palacios stated that the bill posed “several legal issues” and lacked robust enforcement measures to prevent illegal gambling activities.

He also raised concerns about regulating an industry that could cross jurisdictional boundaries, making it difficult to confine the activities solely to Tinian.

The veto represents a setback for Tinian’s efforts to diversify its tourism-dependent economy through blockchain technology.

The proposed stablecoin aimed to position Tinian as a hub for financial innovation, potentially making it the first U.S. government entity to issue a stablecoin, ahead of Wyoming’s planned state-backed stablecoin launch in July.

The Tinian government had partnered with Marianas Rai Corporation, a tech firm based in Saipan, to develop the stablecoin's infrastructure on the eCash blockchain.

The company’s co-founder, Vin Armani, criticised the veto, stating that the legal objections were flawed and that the initiative could have addressed the territory’s financial struggles.

Palacios did not comment directly on the stablecoin but focused on broader regulatory challenges.

His decision underscores the complexities of integrating digital currencies into existing frameworks while ensuring compliance with federal laws.