Marshall Islands Completes World’s First Blockchain-Based UBI Program

The Government of the Republic of the Marshall Islands announced on December 16 that it has completed the country’s first nationwide distribution of Universal Basic Income (UBI) using blockchain technology, marking a global first in digital public welfare.

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The Marshall Islands is launching blockchain-based UBI, giving citizens dollar-denominated tokens they can receive, store, and send peer-to-peer from their phones.

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The program was carried out under ENRA, the country’s national social support initiative, and represents the first real-world, government-led deployment of blockchain-powered UBI at a national scale.

Distributions were made using USDM1, a digitally native sovereign debt instrument issued in U.S. dollars and fully backed by short-term U.S. Treasury securities, ensuring price stability and transparency.

Overcoming Geographic Barriers With Digital Payments

The Marshall Islands faces unique logistical challenges due to its vast ocean territory and widely dispersed islands, which have historically made physical cash distribution costly, slow, and inefficient.

Through digitization, citizens were able to receive UBI payments quickly and securely via Lomalo, a purpose-built digital wallet designed specifically for public benefit distribution.

According to the Stellar Development Foundation (SDF), the country has long suffered from limited access to correspondent banking services, making the creation of alternative financial infrastructure a critical national priority.

The world's first onchain disbursement of universal basic income, built on Stellar.

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Previously, cash payments often had to be delivered by boat, which is an approach burdened by high transportation, security, and administrative costs. Blockchain technology was selected to address these inefficiencies by enabling secure, transparent, and tamper-resistant nationwide payments.

Blockchain Infrastructure Designed for Accessibility

At the core of the system is Lomalo, a user-friendly wallet tailored to account for varying levels of digital literacy among citizens. Unlike general-purpose crypto wallets, Lomalo is optimized exclusively for welfare distribution and public finance use cases.

The platform operates on the Stellar network, whose native asset, XLM, is known for low transaction fees and fast settlement, making it well-suited for large-scale social payments.

SDF CEO Denelle Dixon described the initiative as “a realization of what the Stellar network was built for,” emphasizing its role in enabling inclusive and efficient financial systems. The foundation supported the project with multi-million-dollar grants to help build the technical infrastructure.

Unlike pilot programs or theoretical trials, the initiative is already functioning as a live, government-run welfare distribution system, drawing international attention as a breakthrough example of blockchain in public policy.

Legal Structure and Protection of Monetary Sovereignty

The USDM1 instrument used for the UBI distribution is issued under New York law and follows a structure similar to Brady bonds, commonly used in emerging markets.

Each unit of USDM1 is continuously backed by U.S. Treasury securities and held under legally segregated custody. An independent trustee structure ensures that neither the government nor private issuers can unilaterally alter collateral arrangements, reinforcing transparency and investor protection.

The International Monetary Fund (IMF) has previously warned that digital financial instruments like USDM1 could introduce risks disproportionate to their expected returns. In response, the Marshall Islands government stressed that the program is a fiscal distribution mechanism not a currency initiative.

Officials emphasized that USDM1 is intended as a complementary fiscal tool, not a replacement for existing currency systems, and does not compromise national monetary sovereignty.

While the initiative joins global digital currency experiments such as the Bahamas’ Sand Dollar and Cambodia’s Bakong, it stands apart by focusing exclusively on welfare distribution rather than retail payments or central bank digital currencies (CBDCs).

The government maintains that USDM1 does not undermine financial or technological sovereignty and instead represents a forward-looking national strategy leveraging digital innovation to improve public services.