The Marshall Islands has made global financial history by launching the world's first national universal basic income (UBI) scheme that offers payments via cryptocurrency. The pioneering programme provides quarterly payments of approximately $200 to every resident citizen, aiming to alleviate severe cost of living pressures in the remote Pacific archipelago.
A Digital-First Social Safety Net
In a world-first initiative, recipients can choose how they receive their funds. The money can be deposited into a traditional bank account, issued as a paper cheque, or delivered as a government-backed cryptocurrency via a digital wallet. The first instalments were successfully distributed in late November.
Finance Minister David Paul explained the government's motivation, stating the scheme ensures "no one is left behind." He emphasised that the $800 annual sum is not intended to replace employment but acts as a crucial "morale booster" and a foundational social safety net for the nation's 42,000 citizens.
Blockchain Technology Meets Geographic Challenge
The inclusion of a cryptocurrency option, specifically a US dollar-pegged stablecoin, is a direct response to the logistical nightmare of distributing cash across hundreds of remote islands and atolls. "We saw the opportunity in what the blockchain has to offer," Minister Paul noted.
The scheme is financed by a substantial trust fund, established under a compact with the United States. This fund, holding over $1.3 billion in assets with a further $500 million committed by the US through 2027, partly compensates the islands for decades of American nuclear testing during the Cold War.
Adoption Challenges and Early Impact
Despite the innovative digital delivery method, initial uptake of the cryptocurrency option has been modest. Officials report that only around 12 people have so far opted for the digital wallet. In the first payment round, roughly 60% of recipients chose direct bank deposit, with the remainder receiving paper cheques.
Finance manager Anelie Sarana, who helped roll out the scheme, described travelling to outer islands to register citizens. She observed the immediate impact of the payments, with funds being used for essentials like food or to celebrate the annual Gospel Day holiday. "I know they're happy," Sarana said, "because you can see in the streets, there's so much traffic."
Expert Analysis and Cautious Optimism
Dr Huy Pham, a crypto-fintech expert at RMIT University, confirmed the scheme's unique status as a "world first for a national rollout." However, he cautioned that digital payments alone don't guarantee financial inclusion, highlighting the nation's patchy internet connectivity as a significant barrier.
The International Monetary Fund (IMF), which previously criticised the nation's 2018 plan for a national cryptocurrency called the Sovereign (SOV), has issued fresh warnings. It stated the blockchain-based delivery carries financial, legal, and reputational risks if governance is not robust.
Dr Monique Taylor, a world politics lecturer at the University of Helsinki, said the experiment's success is hard to predict due to a lack of precedent. Nevertheless, she acknowledged the potential benefits for small, dispersed island states where conventional banking infrastructure is limited, suggesting a digital wallet could "lower frictions" for those in remote atolls.
