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The government of the Marshall Islands has launched the world’s first national universal basic income program supported by blockchain technology.
The Marshallese government is distributing a fully collateralized sovereign bond backed by short-term U.S. treasuries, USDM1, on the Stellar blockchain to Marshall Island citizens as part of its universal basic income program, Stellar Development Foundation said in a statement on Dec. 16.
The Marshallese government’s UBI program, funded through the U.S.-capitalized Compact Trust Fund created to compensate for years of nuclear testing, distributes $200 to citizens quarterly in response to rising living costs and migration.
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Recipients can choose to receive their funds either through direct deposit, mailed checks, or USDM1 tokens in the government-backed wallet Lomalo, created by the cryptocurrency infrastructure company Crossmint, the Marshallese Ministry of Finance said in October
The move to employ blockchain-based assets comes in response to banking woes Marshallese citizens have faced since the 2008 financial crisis, a white paper from the Ministry of Finance said.
Since 2008, the Marshall Islands has lost 700 correspondent banking relationships as compliance costs have grown, the white paper said. This has led to difficulties accessing cash, with citizens often having to rely on infrequent physical U.S. dollar shipments in containers and travel long distances by water to receive them.
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“For families in remote communities who previously waited weeks for paper checks or cash shipments, this changes everything,” Crossmint co-founder Rodri Touza said. “With Lomalo and USDM1, citizens can now receive payments in seconds. It’s a blueprint for how organizations can use stablecoins to modernize financial infrastructure to reach everyone, no matter where they live.”
Still, most recipients are choosing to receive their payments by conventional means, The Guardian reported on Dec. 17, citing the Marshall Islands Social Security Administration. About 60% of first-round payments made in November were direct bank deposits, while the remainder were bank checks, according to the report. Only about 12 people have opted to receive payments in USDM1, the report said.
