What is Universal Basic Income — A New Digital Distribution Model Demonstrated by the Marshall Islands

At the forefront of financial innovation brought by blockchain technology, the Republic of the Marshall Islands is continuously launching new experiments. The latest announcement involves utilizing the sovereign digital bond USDM1, based on the Stellar network, as part of the country's regional support program ENRA, to enable on-chain distribution of Universal Basic Income. This concept is not merely a renewal of remittance systems but shifts traditional quarterly cash distributions to digital transfers, directly benefiting citizens across the islands with millions of dollars.

**Mechanism of the Digital Native Bond USDM1**

USDM1 is designed as a USD-denominated sovereign bond, with the key feature being that it is fully backed by short-term U.S. Treasuries. Distributions are carried out through the customized wallet app Lomalo on the Stellar platform, providing an easy-to-use interface for beneficiaries. This system was developed through collaboration between the Stellar Development Foundation (SDF) and infrastructure provider Crossmint, achieving both technical robustness and credibility.

**Legal Framework and Credit Guarantee**

The Marshall Islands Ministry of Finance clarifies that USDM1 is issued under New York law, relying on an established legal framework. The collateralized U.S. Treasuries are strictly managed by an independent trustee, and redemption rights are fixed and unconditionally enforceable by law. Throughout the ENRA program, each distribution unit issues trust short-term U.S. Treasuries on a 1-to-1 basis, with the entire process fully funded and adopting a legally segregated structure.

**Impact on Sovereignty and Currency**

The government emphasizes that the introduction of USDM1 does not compromise monetary sovereignty or technological independence. The white paper published alongside the program details a broader policy and financial framework. This approach suggests a new model that leverages blockchain technology while maintaining compatibility with traditional financial regulatory systems.

**Implications of On-Chain Implementation of Universal Basic Income**

The Marshall Islands case sets a precedent for realizing the policy concept of Universal Basic Income by utilizing blockchain transparency and efficiency. Distributing digital native sovereign bonds as a mechanism enables rapid, traceable benefits beyond geographical constraints, indicating a new direction for social security policies in the future.