The Marshall Islands are introducing a new version of universal basic income delivered through a digital wallet called Lomalo. Payments will be made in USDM1, a stablecoin pegged to the U.S. dollar and backed by U.S. Treasury bonds.

The government promises that residents will receive their first payout by the end of November. Those who prefer traditional options can continue using checks or bank transfers. According to officials, the digital option should make life easier for people living in remote areas with limited access to banking services.

A bold experiment in the region

Other Pacific nations are also exploring digital public finance. Palau has launched a stablecoin for government employees, while the Solomon Islands are testing a digital version of their national currency. The Marshall Islands, however, are going further by linking social support with a digital asset backed by sovereign debt — an approach still unique in the region.

IMF warns of risks, government rejects criticism

The launch comes just weeks after the International Monetary Fund warned the country against adopting untested digital assets. The IMF argues that the government may lack capacity to manage such a program safely and that combining a digital bond with a new stablecoin could create financial risks. It recommended focusing UBI only on those in real need.

Finance Minister David Paul dismissed the concerns. He says USDM1 is fully backed by U.S. Treasury bonds held in the United States and that the program is structured under New York law. The digital bond model is inspired by Brady bonds, which the IMF historically supported.

A test for the crypto industry and the state

Lomalo marks the first instance of a government linking a digital currency to a universal basic income program for all citizens. For the Marshall Islands, it represents a shift toward a more modern financial system. For the crypto world, it is an experiment that may reveal how such projects work in practice. The key now is whether residents embrace the wallet and whether the IMF’s concerns prove justified.

Sources:

https://cointelegraph.com/news/marshall-islands-universal-basic-income-digital-wallet

https://www.imf.org/en/news/articles/2025/09/10/cs-091025-republic-of-the-marshall-islands-concluding-statement-of-the-2025-article-iv-mission