At a Glance
- The Republic of the Marshall Islands has launched a Universal Basic Income (UBI) program utilizing a government-issued digital asset.
- Citizens can access funds through a new digital wallet, Lomalo, which uses the stablecoin USDM1.
- This initiative follows similar digital currency programs in neighboring Pacific island nations.
- The launch comes amid warnings from the International Monetary Fund (IMF) regarding the risks associated with digital assets and UBI programs.
- The Marshall Islands’ finance minister has stated that the government is actively engaging with the IMF regarding these concerns.
Marshall Islands Rolls Out Digital UBI Program
The Republic of the Marshall Islands has announced a significant step in its financial innovation by enabling citizens to receive funds through a government-issued digital asset as part of its Universal Basic Income (UBI) program. This initiative aims to modernize financial access for its population.
The nation launched a digital wallet named Lomalo, which will leverage USDM1, a stablecoin pegged to the US dollar. This digital wallet will facilitate the distribution of UBI funds, with the first disbursements scheduled for late November. Citizens will have the option to receive their funds via the Lomalo wallet, physical checks, or direct deposit.
David Paul, the finance minister for the Marshall Islands, emphasized the program’s intent: “By introducing a secure digital option alongside our traditional methods, we are strengthening our financial systems and ensuring that no community is left behind.”
Lomalo users will be able to transfer funds to other registered Lomalo users. Currently, wallet setup is restricted to citizens enrolled in the UBI program.
Regional Digital Currency Initiatives
The Marshall Islands’ move aligns with broader digital currency trends in neighboring Pacific island nations. For instance, Palau has previously piloted a stablecoin on the XRP Ledger for government employees. The central bank of the Solomon Islands introduced Bokolo Cash, designed for peer-to-peer transactions and retail payments within the capital city, Honiara.
IMF Concerns and Marshall Islands’ Response
The introduction of the digital wallet and UBI program comes after the International Monetary Fund (IMF) issued warnings regarding the Marshall Islands’ engagement with digital assets. In 2023, the IMF advised the government to re-evaluate its central bank digital currency (CBDC) program, then known as SOV.
In a statement on September 10, 2025, the IMF noted, “Progress on rolling back past digital initiatives is welcome.” However, the fund expressed reservations about the current plans to issue a “digital sovereign bond,” citing significant risks relative to anticipated returns, which they believe cannot be effectively managed due to a lack of preparatory capacity. The IMF recommended that the authorities refrain from proceeding with the global launch as initially planned.
The IMF also highlighted potential adverse macro-fiscal and financial integrity implications stemming from the expansion of Decentralized Autonomous Organizations (DAOs), which the Marshall Islands began recognizing as legal entities in 2022, and the launch of the UBI program utilizing the USDM1 stablecoin, which the fund described as “untested.” The IMF urged the government to consider a more targeted approach for the UBI program, focusing on those most in need.
In response to the IMF’s concerns, Minister David Paul stated that the Marshall Islands government is “in active dialogue with the IMF regarding the UBI programme and USDM1.” Regarding the digital sovereign bond, Paul clarified that it was “issued under New York law and backed 1:1 by short-term US Treasuries held in a bankruptcy-remote account held by a US-based Qualified Custodian.”
Paul further elaborated that the legal structure, enforceability, and redemption mechanisms of USDM1 are designed to align with the IMF’s established treatment of collateralized sovereign obligations, distinguishing it from privately issued digital tokens. He added that the instrument was intentionally structured to resemble the Brady-style framework, which has historically received IMF support.
Conclusion
The Republic of the Marshall Islands is forging ahead with its digital UBI program, incorporating the Lomalo digital wallet and USDM1 stablecoin. While this initiative aims to enhance financial inclusion and modernize services, it operates within the context of IMF warnings regarding the risks associated with digital assets. The government has affirmed its commitment to ongoing dialogue with the IMF to address these concerns and ensure the program’s responsible implementation.
