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- The Marshall Islands has completed the much-anticipated disbursement of universal basic income (UBI) via the Stellar blockchain.
- A spokesperson from the Ministry of Finance has clarified that the program is a fiscal distribution program, not a currency initiative.
The Republic of the Marshall Islands, in November, unveiled a Universal Basic Income (UBI) program that capitalizes on the government-issued digital wallets and stablecoin. In that report, it was stated that USDM1, a digitally native sovereign bond, would be used for these on-chain transfers via the Stellar blockchain. Today, this development has been completed.
According to reports, the UBI disbursement program was implemented in partnership with the Stellar Development Foundation (SDF) and infrastructure provider Crossmint. This program replaces the physical cash deliveries in each quarter to ensure that eligible citizens are adequately covered.
More About the USDM1 and the Stellar-Powered Program
In a previous report, USDM1 was explained as a US dollar-denominated sovereign bond completely backed by short-term US Treasury Bills. Its distribution is expected to be done on the Stellar Disbursement Platform to recipients through Crossmint’s-developed custom-built digital wallet app, Lomalo.
According to an interview with a Finance Ministry spokesperson, this program was influenced by geographical and infrastructural constraints. This includes distance, limited physical infrastructure, and dispersion, “which have shaped the realities of daily life.” Also, the USDM1 is issued using the Brady-bond structure and under the New York law.
Meanwhile, the process was not without concerns, as the International Monetary Fund (IMF) cautioned the Marshall Islands that its medium, USDM1, could carry risk that “may not justify the anticipated return.” However, Finance Minister David Paul clarified that the UBI program is in line with recognized international financial practices. Additionally, he disclosed that it is backed by tangible and reliable assets.
Adding to this, the spokesperson from the finance ministry argued that USDM1 does not compromise the monetary and technological sovereignty of the country. According to him, “This is a fiscal distribution program, not a currency initiative.”
Every unit is issued one-to-one against short-dated U.S. Treasuries held in trust, fully backed and legally segregated at all times.
SDF CEO Denelle Dixon has also lauded the initiative, saying, “This is exactly what blockchain technology adoption should look like.”
The UBI initiative mirrors a global trend and could be likened to the Bahamas’ Sand Dollar and Cambodia’s Bakong system. It is also important to note that apart from the Marshall Islands, Stellar has partnered with US banks and PWC for different projects, including the testing of custom stablecoin issuance on the network, as detailed in our earlier discussion.
