The Lomalo wallet utilizes USDM1, a dollar-pegged stablecoin, to distribute UBI funds to citizens through multiple access methods.
Crypto News
The Republic of the Marshall Islands introduced a digital wallet system that enables citizens to receive Universal Basic Income payments through a government-issued stablecoin. The program launched Wednesday, two months after the International Monetary Fund cautioned against using untested digital assets for sovereign financial programs.
The Lomalo wallet utilizes USDM1, a dollar-pegged stablecoin, to distribute UBI funds to citizens through multiple access methods. Recipients can receive payments via the digital wallet, physical check, or direct deposit, according to the government announcement.
David Paul, finance minister for the Marshall Islands, stated the secure digital option strengthens financial systems while ensuring no community is excluded from access. The first disbursement is scheduled for late November, when registered citizens can begin receiving funds through their preferred method.
Citizens registered for the UBI program can transfer funds to other Lomalo users, according to a spokesperson for the finance ministry. Currently, only individuals enrolled in the UBI initiative are eligible to establish wallets on the platform.
Neighboring Pacific Island nations have implemented similar blockchain-based payment systems in recent years. Palau deployed a stablecoin on the XRP Ledger for government employee payments, while the Solomon Islands' central bank introduced Bokolo Cash for peer-to-peer transactions and retail payments in Honiara.
The International Monetary Fund warned the Marshall Islands government in September against proceeding with plans to issue a digital sovereign bond. The fund stated the initiative carried significant risks relative to returns and could not be effectively managed given the nation's capacity constraints.
The IMF noted in a Sept. 10 notice that expansion of Decentralized Autonomous Organizations, which the Marshall Islands recognized as legal entities in 2022, combined with the UBI program using USDM1 could create adverse macro-fiscal and financial integrity risks. The organization recommended scaling back the program to target only those with the greatest need.
The fund urged the government in 2023 to reconsider its central bank digital currency program, previously known as SOV. The latest UBI launch proceeds despite IMF concerns about the untested nature of the stablecoin infrastructure and potential systemic risks to the island nation's financial system.
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