Marshall Islands government launched USDM1, a Treasury-backed token on Stellar, to distribute universal basic income on-chain. The initiative replaces physical cash transfers to remote populations across the scattered island nation, reaching 40+ merchants and enabling peer-to-peer transfers. IMF, SDF, and government officials discuss implementation and policy implications.
At the IMF World Bank Week, officials from the Marshall Islands government, Stellar Development Foundation, and IMF discussed how USDM1, a Treasury-backed token, is transforming government finance in the island nation. The initiative addresses a critical challenge: distributing payments to remote populations scattered across close to a million square kilometers, where traditional banking is geographically infeasible. USDM1 is issued by the government, backed 1:1 by U.S. Treasuries, and yields income—distinct from stablecoins or CBDCs. Disbursements go through the Stellar Disbursement Platform, with recipients claiming funds via the Lomelo wallet using only a phone number or email. Within a year, the program has engaged over 40 merchants and a population of 40,000, shifting commerce from cash-in-hand transactions to peer-to-peer digital payments. The IMF emphasized the importance of transparent reporting and proper integration into public financial management frameworks, while SDF highlighted lessons learned from humanitarian use cases. The initiative demonstrates how blockchain infrastructure can solve real infrastructure gaps in underserved markets.
