Marshall Islands Launches First Blockchain-Based Universal Basic Income

The Republic of the Marshall Islands has launched the world's first blockchain-based universal basic income (UBI) program, utilizing the Stellar blockchain. This initiative, known locally as ENRA, replaces quarterly cash deliveries with digital transfers, aimed at providing financial assistance to its citizens, many of whom reside across remote islands.

Each eligible citizen will receive approximately $200 quarterly, which is financed by a trust fund established under an agreement with the United States, holding over $1.3 billion in assets. The UBI payments can be received via traditional methods or through a government-backed digital wallet called Lomalo, developed by Crossmint.

This scheme was designed to address the unique challenges of delivering funds in a geographically dispersed nation. The U.S. Treasury-backed sovereign bond, USDM1, underpins the program, ensuring that each unit is legally enforceable and backed by short-term U.S.

Treasury bills. Despite the innovative approach, experts express concerns regarding internet connectivity and the relatively low uptake of digital wallet options, with only 12 citizens opting for cryptocurrency payments in the initial rollout.

The Finance Ministry emphasizes that the UBI program is a fiscal distribution initiative and not a currency project, aiming to provide a social safety net amid rising living costs. The Marshall Islands previously experimented with a national cryptocurrency, known as the Sovereign, but that initiative stalled due to concerns raised by the International Monetary Fund.

The current UBI program is seen as a potential model for other nations considering similar blockchain-based welfare systems.