Update (March 25 8:22PM UTC): This article has been updated to clarify the role of M1X Global in the first paragraph.

The technology provider building the infrastructure for the Republic of the Marshall Islands’ universal basic income (UBI) program which will use a US dollar-pegged sovereign financial instrument has attracted some significant crypto-tied backers.

In a Tuesday notice shared exclusively with Cointelegraph, M1X Global announced that it had launched following a $3 million angel investment round by current and former executives connected to crypto and financial services companies.

Backers for the M1X Global angel round included former Coinbase chief technology officer Balaji Srinivasan and Cumberland Labs CEO Tama Churchouse.

According to the company, the funding will support the development and adoption of the USDM1 digital sovereign bond which allows citizens of the Republic of the Marshall Islands to access the UBI program.

While the Marshall Islands debuted USDM1 on the Stellar blockchain in December, M1X Global said it intended to expand the digital instrument’s use cases into institutional markets. According to M1X co-founder and COO Jordan Goldman, the expanded access to the instrument will allow it to “serve as high-quality collateral.”

Many countries have introduced similar programs furthering the adoption of digital assets, from the Bahamas launching the first central bank digital currency in 2021 to Palau backing blockchain savings bonds in 2024. The Bank of Canada said earlier this month that a pilot program had resulted in the issuance of the country’s first tokenized bond.

Related: What happens to Bitcoin if US bond yields soar above 5%?

IMF cautioned against Marshall Islands launching digital sovereign bond

Although the launch of the UBI program using USDM1 kicked off in December, the International Monetary Fund (IMF) had warned the government of the Marshall Islands not to launch the digital sovereign bond “given the lack of pre-requisite capacity and ability to effectively mitigate associated risks.” The IMF said that the instrument’s ability to improve financial inclusion was “limited in the near term, given the lack of adequate digital infrastructure.” 

“The risks posed by a global launch of USDM1 appear to be disproportionally higher than the perceived gains and cannot be mitigated given lack of prerequisite capacity,” said the IMF in a December report on the Marshall Islands, adding:

A representative of the Marshall Islands government told Cointelegraph in November that it was “in active dialogue with the IMF regarding the UBI programme and USDM1” and the digital bond was “intentionally designed to mirror the Brady-style framework historically supported by the IMF.”

Regarding the M1X Global launch, a spokesperson for the Marshall Islands’ government told Cointelegraph that the IMF warning was based on the fact that USDM1 was untested at the time.

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