Under the program, eligible citizens receive UBI payments sourced from returns generated by USDM1, a tokenized, USD-denominated sovereign bond instrument. The bonds are issued and managed on Stellar, a blockchain network known for low-cost transactions, transparency, and financial inclusion-focused design.
Officials involved in the initiative say the move aims to improve efficiency, reduce administrative overhead, and ensure transparent distribution of public funds while expanding access to digital financial infrastructure.
How the on-chain UBI system works
The Marshall Islands’ UBI model is funded through yield generated by USDM1 sovereign bonds, which are fully recorded and tracked on-chain. Rather than relying on traditional banking intermediaries, distributions are executed directly to digital wallets, allowing for real-time settlement and verifiable fund flows.
By using blockchain infrastructure, the government can program payment rules, automate compliance, and provide public visibility into how funds are allocated. This approach minimizes delays, reduces leakage, and increases trust in public spending.
Stellar’s infrastructure plays a critical role by enabling fast, low-fee transactions that are accessible even in regions with limited banking services. For a geographically dispersed island nation, this capability is particularly significant.
Why USDM1 sovereign bonds matter
USDM1 represents a new category of tokenized sovereign debt, blending traditional government bonds with blockchain-native features. The bonds are designed to maintain dollar-denominated stability while offering on-chain transparency and programmability.
“on-chain sovereign bonds,” “blockchain-based universal basic income,” and “tokenized government bonds on Stellar” are gaining traction as governments explore digital alternatives to legacy financial systems.
By linking UBI payments to sovereign bond yields, the Marshall Islands has created a sustainable funding mechanism that does not rely solely on taxation or external aid. Analysts say this model could attract global interest from policymakers seeking innovative approaches to social welfare.
A milestone for blockchain and public finance
The initiative marks a major milestone for the adoption of blockchain in government operations. While several countries have experimented with digital currencies and tokenized assets, none have previously implemented nationwide UBI distribution entirely on-chain.
Blockchain researchers note that this deployment demonstrates how decentralized infrastructure can be used beyond speculation, delivering tangible benefits in areas such as social security, public finance, and financial inclusion.
The Marshall Islands has previously shown openness to financial innovation, and this move reinforces its reputation as a testing ground for next-generation economic models.
Implications for financial inclusion and transparency
One of the core goals of the program is to enhance financial inclusion. By distributing UBI through blockchain wallets, citizens gain access to digital financial tools that can be used for payments, savings, and participation in the broader digital economy.
Transparency is another key benefit. On-chain records allow citizens, auditors, and international partners to independently verify distributions, reducing concerns about mismanagement or corruption.
Experts say this level of openness could strengthen public trust while setting new standards for accountability in government-led financial programs.
Global reaction and future adoption
The announcement has drawn attention from international development organizations, blockchain firms, and policymakers worldwide. Some see the Marshall Islands’ approach as a potential blueprint for digital UBI systems in emerging and small economies, where traditional banking infrastructure is limited.
However, analysts caution that scalability, digital literacy, and cybersecurity will be critical factors in determining whether similar models can be adopted elsewhere.
Looking ahead
The Marshall Islands government has indicated that it will closely monitor the program’s performance and explore additional on-chain financial tools in the future. Potential expansions could include broader use of tokenized assets, digital identity integration, and cross-border settlement applications.
As the first nation to deliver universal basic income fully on-chain, the Marshall Islands has set a historic precedent. If successful, its USDM1-on-Stellar model could reshape how governments think about welfare, bonds, and the role of blockchain in public finance.