Blockchain-based universal income targets financial inclusion and banking resilience
The Marshall Islands have launched an innovative pilot program that distributes universal basic income through cryptocurrency, marking a significant step in the use of blockchain for public finance. The initiative replaces cash and paper-based payments with a digital token issued on the Stellar blockchain, aiming to improve financial access, resilience, and social equity in a nation long challenged by limited banking infrastructure.
Crypto-based universal income explained
Under the national ENRA program, approximately 40,000 citizens receive payments in USDM1, a digital token built on Stellar and delivered through Lomalo, a user-friendly digital wallet. Unlike traditional stablecoins, where reserve yield benefits issuers, USDM1 is structured so that yield accrues directly to citizens, allowing recipients to benefit from interest generated on the underlying assets.
This design distinguishes the program from conventional digital payment systems and positions it as a test case for crypto-powered public income models.
Addressing banking isolation
The project responds to long-standing financial vulnerabilities. Since 2008, the Marshall Islands have relied on a single international correspondent bank, creating systemic risk. If that connection were severed, access to the global financial system could be lost. By using blockchain infrastructure, the country aims to reduce dependence on traditional banks and maintain continuity of payments.
Beyond payments, the initiative seeks to rebalance social dynamics. Universal income is deposited into individual digital accounts, not shared household accounts. This approach strengthens financial autonomy, particularly for women and vulnerable groups, by ensuring aid reaches its intended recipients.
The Marshall Islands pilot is also part of a broader strategy to deploy blockchain-based aid systems in regions with fragile financial infrastructure. If successful, it could serve as a model for other countries exploring digital currency solutions for social support in environments where cash and banking access remain unreliable.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.