The Republic of the Marshall Islands has marked a global first in public finance. On December 16, 2025, the island nation completed the world’s first on-chain disbursement of universal basic income (UBI) using a digitally native sovereign bond issued on the Stellar blockchain.
The milestone represents a real-world deployment of blockchain technology at a national level, moving beyond pilots and into live public service delivery.
How The On-Chain UBI System Works
The initiative operates under the ENRA program, part of the Marshall Islands’ national UBI framework. Instead of relying on physical cash or delayed banking rails, the government distributes funds through USDM1, a U.S. dollar–denominated digital bond.
USDM1 is fully backed by U.S. Treasury bills, giving it a structure closer to a tokenized sovereign instrument than a typical stablecoin. Payments are sent directly on-chain, allowing for transparent and auditable fund flows.
Distribution is handled through Lomalo, a custom-built digital wallet developed in collaboration with the Stellar Development Foundation and infrastructure provider Crossmint.
Solving Access Challenges Across Remote Atolls
The Marshall Islands consists of 24 widely dispersed atolls, many of which lack consistent banking infrastructure. Traditional cash deliveries often involve long delays, logistical risks, and high costs.
The digital wallet system eliminates those bottlenecks. Citizens can now receive funds instantly on-chain, regardless of location, without relying on physical cash shipments or local bank branches.
More than 33,000 citizens have already enrolled in the program. While the Lomalo wallet enables blockchain-based payouts, participants can still opt for physical checks or direct bank deposits, ensuring inclusivity for those less comfortable with digital tools.
Funding, Oversight, And Compliance
The UBI program is capitalized through the Marshall Islands Compact Trust Fund, providing a long-term financial base for the initiative.
From a regulatory standpoint, the government structured USDM1 under domestic law while aligning the system with Financial Action Task Force (FATF) anti-money laundering standards. This compliance-first approach was designed to reduce international risk concerns and support transparency.
Moving Forward Despite IMF Warnings
The rollout proceeds despite caution from the International Monetary Fund, which has previously warned about the universal scope of the program and potential digital asset risks.
Marshall Islands officials, however, view the system as a necessary response to financial exclusion, de-risking pressures, and geographic constraints that limit access to traditional banking services.
A Model For Other Small Nations
Beyond its immediate impact, the project offers a blueprint for other Pacific Island nations and small economies facing similar challenges. By combining tokenized sovereign instruments with public blockchains, governments can deliver social programs faster, more transparently, and at lower cost.
The Marshall Islands’ on-chain UBI marks a turning point, showing that blockchain-based public finance is no longer theoretical, but operational.
