Marshall Islands Test Crypto Assets for Basic Income Payments

The Republic of the Marshall Islands has taken a bold step into the future by piloting payments of universal basic income (UBI) through blockchain technology. This innovative approach utilizes the Stellar network, marking a significant shift towards integrating cryptocurrency into governmental financial systems. By leveraging this technology, the government seeks to explore whether blockchain can effectively replace physical currency and conventional banking services.

Digital Asset Distribution via Blockchain

In November 2025, under the ENRA program, certain citizens began receiving their UBI in the form of USDM1, a digital asset dispensed through Lomalo—a state-operated application developed on the Stellar network. This initiative is made possible with contributions from Crossmint and Stellar Development Foundation.
The USDM1 is not your typical stablecoin; it is fully backed and functions like a money market fund. Notably, holders receive any generated income directly, differentiating it from most stablecoins where issuers typically benefit.

Addressing Structural Banking Limitations

Targeting approximately 40,000 residents, this quarterly disbursement scheme aims to simplify everyday transactions and savings in a country heavily reliant on cash flow but entirely dollarized. Experts point out that Marshall Islands’ banking infrastructure remains fragile. The 2008 financial crisis led many banks to withdraw from the region, leaving it dependent on a single correspondent bank. Consequently, citizens often face long distances just to cash checks or access funds.
Despite widespread internet access via Starlink, cash delivery still underpins the local economy—often transported in sea containers—and ATM service disruptions are common occurrences.

Reducing Systemic Risks with Digital Solutions

Authorities view these digital payments as pivotal in mitigating systemic risks associated with traditional financial operations. The experience gained here stems from previous projects by the Stellar Development Foundation involving humanitarian aid distributions and developing digital payment systems alongside international bodies such as United Nations Development Programme and UNHCR.
Such models are believed to enhance financial resilience and improve targeting social benefits distribution, especially for vulnerable populations.
The rise of stablecoins has also been observed globally; notably in Venezuela amidst economic turmoil where they gained substantial traction. As these developments unfold, they showcase cryptocurrency’s potential for revolutionizing how governments handle economic challenges and public welfare distribution—advancing towards more inclusive financial ecosystems worldwide.