Stellar News Today: Marshall Islands Spur Blockchain UBI Experiment with Dollar-Backed Bond

The Marshall Islands has become the first nation to launch a blockchain-based universal basic income (UBI) using a digitally native sovereign bond on the Stellar blockchain. The program, known locally as ENRA, replaces quarterly physical cash deliveries with on-chain digital transfers to citizens across the country's widely dispersed islands. The initiative was developed in partnership with the Stellar Development Foundation (SDF) and infrastructure provider Crossmint, and it marks a significant step in leveraging blockchain for national financial programs.

The UBI disbursement is made through a U.S. dollar-denominated bond called USDM1, which is fully backed by short-term U.S. Treasury bills. This bond is distributed via a custom-built digital wallet app named Lomalo, developed by Crossmint, allowing instant fund transfers to eligible recipients on the Stellar network. The government emphasized that this system is designed to ensure financial sovereignty and legal enforceability, with U.S. Treasury collateral held by an independent trustee outside government control.

The program's launch follows years of development shaped by the Marshall Islands' unique geographical and infrastructural challenges. With many citizens living across isolated islands, the government sought a solution that could streamline financial access without relying on traditional physical infrastructure. The ENRA initiative is not a currency experiment, according to the finance ministry, but a targeted fiscal distribution program aimed at improving everyday financial access.

Blockchain as a Public Infrastructure Tool

The Marshall Islands' move underscores blockchain's growing role as a tool for public infrastructure and financial inclusion. The Stellar blockchain, known for its low transaction costs and fast processing speeds, was chosen for its efficiency and compatibility with the government's vision. SDF CEO Denelle Dixon noted that the program exemplifies how blockchain technology can provide financial access where traditional systems fall short, particularly in remote or underdeveloped regions.

The UBI bond, USDM1, operates under a time-tested Brady-bond structure, a framework that has supported sovereign finance for decades. This legal and regulatory foundation, rooted in New York law, ensures that the bond is backed by settled legal principles rather than policy preferences. The government also highlighted that every unit of USDM1 is issued one-to-one against U.S. Treasuries held in trust, maintaining full legal segregation and enforceable redemption rights.

Implications for Sovereignty and Innovation

The Marshall Islands government has stressed that the initiative does not compromise national monetary or technological sovereignty. A finance ministry spokesperson clarified that the UBI remains a fiscal distribution mechanism rather than a currency initiative, with all underlying assets fully secured and legally protected. This distinction is crucial, as the country navigates a broader global conversation about blockchain-based governance and monetary systems. The project's success could inspire other nations facing similar logistical challenges to explore blockchain solutions for public services. With distance and limited infrastructure shaping daily life in the Marshall Islands, the government sees this initiative as a tailored response to local needs. A white paper accompanying the launch outlines the broader financial framework for USDM1, detailing its policy and legal underpinnings.

Broader Trends in Blockchain Adoption

The Marshall Islands' blockchain-based UBI is part of a broader trend of blockchain adoption across both public and private sectors. In the United States, JPMorgan and BlackRock have recently launched tokenized money market funds on public blockchains like Ethereum, signaling increased institutional interest in digital assets. Meanwhile, PayPal has applied to become a bank in the U.S., potentially expanding its reach into digital finance.

Regulatory developments are also supporting this shift. In the UK, the Financial Conduct Authority (FCA) has opened a consultation on the country's first comprehensive crypto rulebook, aiming to bring clarity and consistency to the fast-evolving industry. In the U.S., the Trump administration has pushed for a more open regulatory environment, with the SEC's recent Project Crypto initiative aiming to bring the financial market onchain.

As blockchain technology continues to mature, more governments and institutions are likely to explore its potential for financial innovation, transparency, and efficiency. The Marshall Islands' UBI program is a landmark demonstration of how blockchain can be used to address real-world challenges in governance and public services.