Marshall Islands Pioneers Blockchain UBI with Tokenized Dollars - A Sovereign Digital Experiment

The Marshall Islands just cut the red tape on traditional welfare—launching the world's first sovereign blockchain-based Universal Basic Income program. Forget paper trails and bureaucratic delays. This Pacific nation is minting its future directly on-chain.

Tokenizing the Safety Net

They're not using a volatile crypto asset for payments. Instead, the program leverages a stablecoin—a digital dollar pegged 1:1 to the US currency. This move bypasses legacy banking infrastructure entirely, delivering funds straight to citizens' digital wallets. Speed and transparency become the new default, not an expensive upgrade.

Sovereignty in the Digital Age

For a nation facing existential threats from climate change, this isn't just a tech upgrade—it's a strategic pivot. By building a digital-first financial system, the Marshall Islands is asserting economic sovereignty and future-proofing its governance. It's a bold bet that blockchain can do what decades of development aid haven't: create a resilient, inclusive economy from the ground up.

The program turns every citizen into a direct participant in the national economy, no intermediaries required. It's a live experiment in decentralized governance, with a tokenized dollar serving as the lifeline. Watch as traditional finance scrambles to explain why their system takes three days to settle what a blockchain does in three seconds—probably blaming 'compliance costs' while counting their fees.

Tokenizing cash access across a dispersed nation

Under the program, citizens receive UBI payments through the Lomalo mobile app, where funds can be stored in a Crossmint-powered wallet and sent peer-to-peer instantly. The system runs on the Stellar blockchain, allowing low-cost, near-instant settlement even across remote atolls.

At the Core of the rollout is USDM1, a fully collateralized digital sovereign bond issued by the Marshall Islands and backed 1:1 by short-term U.S. Treasuries. Unlike corporate stablecoins, USDM1 represents a sovereign obligation governed under New York law, with collateral held by regulated U.S. trust entities.

The government said the structure allows digital dollars to circulate without creating a new currency or altering the country’s fully dollarized monetary system, while reducing reliance on fragile correspondent banking links.

From correspondent banking crisis to onchain distribution

Pacific Island nations have lost hundreds of correspondent banking relationships over the past decade, leaving the Marshall Islands dependent on a single foreign bank and driving up remittance and transaction costs.

Officials argue that blockchain-based distribution can ease domestic liquidity constraints, reduce cash hoarding, and lower the economic “tax” created by physical dollar scarcity. The UBI program, known as ENRA, is funded by the country’s Compact Trust Fund, which exceeded $1.3 billion in assets in 2025.

The approach mirrors a broader global trend toward tokenized public finance. Uganda recently launched a CBDC pilot tied to real-world assets, while other governments have tested tokenized bonds and digital payment rails to modernize settlement without abandoning existing legal frameworks.

A real-world test for sovereign tokenization

For the Marshall Islands, the initiative isn’t a crypto experiment or a tech demo. It’s a blunt response to reality, using blockchain as a delivery rail to get money to people scattered across millions of square kilometers of ocean, where the old system keeps failing.

If it works at scale, USDM1 and Lomalo could turn the Marshall Islands into a real-world example of how sovereign-backed digital assets can support welfare and liquidity without breaking U.S. dollar systems or existing law.

Also read: Norway’s Central Bank Sees No Immediate Need for CBDC