Marshall Islands Tests Stellar-Based USDM1 for Universal Basic Income Amid Banking Challenges
The Marshall Islands has implemented a Stellar-based digital currency, USDM1, to distribute universal basic income (UBI) to its population of 40,000. Since late November 2025, eligible citizens have received quarterly disbursements through either the Lomalo digital wallet or paper checks distributed by the country's Economic National Recovery Authority (ENRA).
USDM1 is a fully collateralized sovereign bond that yields returns for asset holders and also functions as a medium of exchange, setting it apart from traditional stablecoins for which the issuer earns yield. Lomalo, a Stellar-based digital citizen wallet developed by Crossmint, offers a streamlined user experience lacking typical crypto seed phrases, making it accessible for the general public.
This initiative is part of the government's strategy to digitize its predominantly dollarized economy in an environment with very limited banking infrastructure. Currently, the country retains only one correspondent bank, and losing this connection could isolate the Marshall Islands from the global financial system. Physical cash remains the dominant means of transaction, often shipped via containers, and citizens frequently endure long journeys to access funds despite improvements in internet connectivity through Starlink.
Funding for the USDM1 program comes from a multi-million-dollar grant provided by the Stellar Development Foundation (SDF). The SDF is also involved in international cash disbursement projects, including payroll payments for healthcare workers in the Middle East and aid distributions coordinated with UNDP and efforts in Ukraine using Circle USDC. The Foundation emphasizes that digital funds are intended solely for individuals and strives to expand financial access in remote regions while considering social dynamics and safety, particularly benefiting vulnerable groups such as women.
