Marshall Islands Turn to Digital Assets to Expand Financial Access

The Republic of the Marshall Islands recently announced it is testing a blockchain-based system for its universal basic income program. This initiative aims to reduce reliance on cash and improve financial access for its people.

Marshall Islands Moves From Paper Checks to Digital Wallets

In recent weeks, Marshallese citizens received their universal basic income in two different ways. Some continued to collect paper checks through the Economic and Natural Resources Authority program

Others saw funds arrive digitally in Lomalo, a digital citizen wallet built on the Stellar network, an open-source blockchain. The digital funds came in the form of USDM1, a token designed to function as a sovereign financial instrument

USDM1 works as a fully backed government bond, not as a typical stablecoin. The asset generates yield for the holder, similar to a money market fund, instead of directing returns to the issuer

This structure allows the token to act both as a store of value and as a means of payment for everyday needs. At the same time, this bond-based design lowers the risk of price swings that often affect other digital currencies like Bitcoin.

Building a Wallet for the General Public

Even with strong internet access from satellite services like Starlink, physical cash still dominates daily life. Cash often arrives by ship, and shortages happen when deliveries are delayed

These limits slow business activity and make it harder for people to access money. Digital payments through Lomalo reduce these problems by sending funds directly to individuals without relying on physical cash systems.

Lomalo was built to be easy to use. It removes many complex features found in crypto products. In addition, crypto infrastructure firm Crossmint manages user access so citizens can use their money without special technical knowledge.

The shift to digital assets reflects deeper problems in the Marshall Islands’ financial system. After the 2008 global financial crisis allegedly caused by economic crisis, several international banks left the country

Over time, new rules and higher risk concerns made foreign banks less willing to operate there. Today, the country depends on a single correspondent bank for basic services such as wire transfers. USDM1 offers another option that lowers this risk.

Part of a Broader Global Strategy

The USDM1 project is part of a larger effort by the Stellar Development Fund to improve financial access in areas with weak banking systems. The organization provided several million dollars to support the token’s development.

Similar projects support salary payments for healthcare workers in conflict areas and cash aid programs run with international agencies. Earlier work with the Ukrainian government and humanitarian groups helped shape the Marshall Islands approach

These efforts focus on direct control, ensuring that each person owns and manages their own digital funds.

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