Marshall Islands Debuts USDM1 Digital Currency for "Enra" Aid Distribution

The Marshall Islands launches its first sovereign digital currency, USDM1, to facilitate Universal Basic Income (UBI) distributions via the Lomalo app.

By: AXL Media

Published: Apr 2, 2026, 10:13 AM EDT

Source: Source received: RNZ (Radio New Zealand)

A Financial Innovation Built on the Stellar Blockchain

USDM1 marks a historic milestone as the world’s first sovereign digital bond issued on the Stellar blockchain network. This currency is pegged 1-to-1 with the U.S. Dollar and collateralized by the U.S. Treasury. Project promoters view this as an ideal solution for delivering funds across an island nation spanning hundreds of thousands of square kilometers of ocean, where physical bank access is difficult or impossible for many residents of the country’s 24 atolls.

Distribution Process and COFA Restrictions

Due to strict rules from the Compact of Free Association (COFA) Trust Fund—funded by the U.S.—the $26 million in funds cannot be transferred directly into digital wallets. Currently, recipients must collect a paper check from the Social Security Administration (MISSA) and then convert it into USDM1. Finance Minister David Paul confirmed that the government has proposed an amendment to the U.S. to allow direct transfers, but until then, physical documentation remains mandatory for auditing purposes.

Local Business Piloting and "Cash-Out" Functionality

For the second quarterly payment at the end of March 2026, approximately 100 citizens chose to use the Lomalo wallet. Jeremy Coffey, one of the program’s principals, stated that small-scale pilots are currently being conducted with local businesses to allow the use of USDM1 as a means of payment in the domestic market. The primary challenge remains the "cash-out" functionality, which would allow users to convert digital currency back into physical cash (USD), a feature still in the testing phase.