Marshall Islands executed the world’s first on-chain UBI using USDM1 sovereign bond

The Republic of the Marshall Islands has executed the first on-chain universal basic income payout in history using a digitally native, U.S. dollar-backed sovereign bond, USDM1, on the Stellar blockchain. The launch provides residents of the nation’s remote islands with instantaneous digital payments, replacing real cash deliveries.

The Marshall Islands is a sovereign republic based on U.S. dollars operating under the Compact of Free Association (COFA) with the United States. The COFA was reaffirmed in 2024 and will remain in place until 2043.

According to the Marshall Islands’ Finance Ministry, the project was created in collaboration with the Stellar Development Foundation (SDF) and infrastructure supplier Crossmint. The project is locally named ENRA. The ministry stated that the project is a component of the RMI’s national UBI program. The initiative replaces direct digital payments with quarterly physical cash deliveries for qualified citizens, many of whom reside on far-flung islands.

Marshall Islands deploy blockchain to streamline UBI payments

The Marshall Islands Finance Ministry verified the operation, which represents a multimillion-dollar milestone in the deployment of state-backed blockchain technology.

The ministry claimed that this new model aims to lower the high expenses of transferring money among distant atolls while increasing the dependability and transparency of social transfers. The administration did emphasize, though, that the project is specifically tailored to Marshallese geography.

According to the ministry, a key component of the system is USDM1, a digitally recorded government security denominated in U.S. dollars and completely backed by short-dated U.S. Treasury notes. The structure enables the processing of electronic disbursements within the current U.S. dollar financial system. According to the government, digitizing issuance and settlement provides a means of reaching people in the country’s 24 scattered atolls, where access to banking services has traditionally been restricted.

The ministry report noted that the Stellar Disbursement Platform distributes the instrument into a specially designed app named Lomalo. According to the government, Lomalo will enable electronic access to benefit payments, eliminating the need for local banking infrastructure and reducing delays previously observed in transfers to outer islands.

Finance Minister David Paul stated that the program’s objectives are to increase access to government services and standardize the distribution of income support across the nation’s geographically scattered communities. He pointed out that the introduction of a digital option is intended to complement current payment methods rather than to replace them.

According to the ministry report, over 33,000 residents have signed up for a nationwide registration campaign, which is the biggest coordinated outreach initiative carried out throughout the nation’s atolls. The report revealed that the first UBI payment was expected to be made to all eligible recipients in late November.

USDM1 structure reinforces legal backing and sovereign control

A Finance Ministry representative stated that USDM1 is issued in accordance with New York law, using a tried-and-true Brady-bond structure that has helped emerging country governments finance their operations for many years. 

The ministry representative further stated that neither the government nor the private issuer controls U.S. Treasury collateral, which is held by an independent trustee. The product’s credentials as a conventional financial instrument, implemented through contemporary railroads, are strengthened by its fixed, unconditional, and legally enforceable redemption rights.

“The program exemplifies what adoption looks like for blockchain technology, enabling everyday financial access where it was previously lacking.”

-Denelle Dixon, CEO and Executive Director of the SDF.

Dixon added that the Pacific region’s infrastructure and physical limitations make such solutions more than merely a technological advancement.

The ministry stressed that USDM1 does not jeopardize the nation’s technological or monetary sovereignty. According to the ministry spokesperson, ENRA is a fiscal distribution program rather than a currency project. The spokesperson added that every unit is issued one-to-one against short-dated U.S. Treasuries held in trust, fully backed, and legally segregated at all times.

A white paper published concurrently with the launch details the larger regulatory, legal, and financial framework underlying the USDM1 sovereign bond and the ENRA program. Additionally, the economic framework for USDM1 places the Marshall Islands experiment within a broader discussion on targeted assistance in underdeveloped areas and digital public finance.

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