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VIN Armani, chief technology officer of Marianas Rai Corporation, and Senate Vice President Karl King-Nabors of Tinian were the special guest speakers at the Saipan Chamber of Commerce’s general membership meeting at the Pacific Islands Club on Wednesday, June 4.
During their presentation, they explained what the Marianas U.S. Dollar or MUSD is and how it will be used on Tinian.
King-Nabors said MUSD is created by Tinian Local Law 24-03, which also allows online gambling on Tinian. MUSD will be the mandated currency used by those who wish to gamble in Tinian’s online system. He said MUSD is not for investments.
“What we’re endeavoring to do is attach a stablecoin component as a digital payment mechanism for an online gaming initiative,” he said. “We’re not asking you to invest in the Marianas U.S. Dollar. It isn’t like bitcoin where you’re going to invest in it and you hope [the value] fluctuates.”
Nabors and Armani called MUSD a “stablecoin,” which means it is a type of cryptocurrency backed by the U.S. dollar on a one-to-one ratio. Those who wish to gamble online in Tinian’s system must first pay into the Tinian Municipality’s reserves, and then MUSD will be created for the gambler equal to the amount paid.
Armani said the process would be similar to how the island community purchases tokens at the Taste of the Marianas food festival.
“You got these chips. One dollar on a chip. You went up, handed the money over [to the Marianas Visitors Authority]. They gave you a token. That’s one [token] that’s backed by one dollar. When the merchant goes and they take this back to the organizers they [hand] in all the chips they have and they’re given back [cash],” Armani said.
“Could you do that digitally? Absolutely you could,” Armani added. “Tinian is the place that everybody has to go in order to put their money in and get their chips.”
He said MUSD exists on a “blockchain,” which is like a digital “public ledger.” All MUSD tokens have unique “cryptosignatures” that exist only for specific tokens. The blockchain is like a public record of where and when the MUSD tokens change ownership or are exchanged for cash. Even if a user deletes MUSD to exchange it for cash, the record of all its exchanges remains permanent, according to King-Nabors and Armani.
Armani said this is a feature that makes MUSD transparent.
“The thing about a blockchain is, it’s a public ledger — anybody can see it,” Armani said. “It’s highly redundant. It can’t be hacked. That means if the feds ever come into Tinian and say ‘Hey, there’s this one transaction over here — who is this?’ Tinian can turn around and tell them, ‘It’s this guy and the money went here and here.’ They can flag anybody that’s moving through. It’s the exact opposite of all of the problems that have existed with gaming here of not being able to track your money.”
King-Nabors said blockchain technology helps ensure accountability.
“We ran aground with the Tinian Dynasty,” he said, referring to the island’s defunct casino. “What they lacked in their reporting capabilities, this technology gives us upfront. At a moment’s notice, anybody with a need to know and has access to the information…will have access and can provide reporting on every component.”
During the question-and-answer portion of the presentation, King-Nabors mentioned that, when MUSD is in operation, customers’ cash that purchases MUSD will be placed in an “interest-bearing” bank account. Tinian will use the interest to purchase U.S. Treasuries.
The pair was asked if there would be a “cap” on the number of MUSD issued.
Armani said the limit of issued MUSD tokens would be determined by how much cash is in the municipal bank account assigned to hold MUSD cash. That is, the number of tokens must match the cash in Tinian’s bank account on a one-to-one ratio. For example, if there is $10,000 cash in Tinian’s MUSD account, it may issue 10,000 MUSD tokens for gambling.
“Whatever coins we have in circulation must match what we have in reserve,” King-Nabors said. “We will [eventually] have more [interest] money in our reserve than we have in circulation. At that point, you will know to take that money out of your system so you keep that one-to-one match.”
Armani added: “The law says Tinian cannot create a token if there is not a corresponding dollar in the bank. Meaning, the dollar has to be in the bank first.”
Armani said that, in order for gamblers to turn their MUSD into cash, they will have to “burn” their token digitally, which means deleting the cryptosignature from the blockchain.
The Tinian Municipality will then pay out the customer when he or she proves the MUSD has been deleted, Armani said. This is done to ensure that the amount of MUSD in circulation matches the cash held by Tinian in reserve. The process will be like a bank transaction, he added.
“Nothing moves,” Armani said. “There’s money in the bank in Tinian and then there’s a database. Entries in the database are changed. Just the same way as if I go into the bank, and you and I bank at the same bank, and I come in and I say I would like to transfer $1,000 to [a person’s] account and here’s her account number — nothing moves. They type some numbers in and the custody of that changes from this person to this person, but nothing has moved.”
The pair were asked by SCC President Joe Guerrero how the Tinian Municipality would profit from MUSD. King-Nabors said the municipality will earn money through the interest gained on MUSD in its account.
Armani said Marianas Rai, for its part, gets paid a processing fee.
“We are entitled to no compensation, no upfront money,” he said. “This has been our own capital. We’ve had no outside investors. We’ve invested our own money into doing this because we’re dedicated to doing this, and then, like any payment provider, we take a processing fee, which is agreed upon in the contract.”
Citing the attorney general’s legal opinion, Gov. Arnold I. Palacios disapproved Senate Local Bill 24-1, but both houses of the Legislature overrode his veto and the measure became Tinian Local Law 24-03.
Attorney General Edward Manibusan recently asked the Superior Court to declare T.L.L. 24-03 unconstitutional.
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