Crypto: All Social Program Benefits Can Be Distributed Onchain: Compliance...

Hong Kong, Thailand, and the Marshall Islands are exploring tokenized debt instruments and administering social benefit programs onchain.

Blockchain technology is an effective medium for administering social benefit programs, but key compliance challenges remain, according to Julie Myers Wood, CEO of compliance and monitoring consulting firm Guidepost Solutions.

Guidepost Solutions advised the Republic of the Marshall Islands’ government on a regulatory compliance and sanctions framework for its USDM1 bond, a tokenized debt instrument issued by the government, backed 1:1 by short-term US Treasuries.

The Marshall Islands government launched a Universal Basic Income (UBI) program in November 2025 that distributes quarterly benefits to citizens directly through a mobile wallet. Wood told Cointelegraph:

Several governments are exploring tokenized debt instruments and administering social benefit programs onchain to eliminate settlement delays and costly transaction fees inherent in traditional finance by disintermediating the issuing and clearing process.

Related: UK government appoints HSBC for tokenized bond pilot

The cost reduction and near-instant settlement times for tokenized bonds and other onchain instruments democratize access to the financial system for individuals who lack access to traditional banking infrastructure.

However, anti-money laundering (AML) requirements and sanctions compliance are two of the biggest regulatory risks for governments issuing onchain bonds to the public, Wood told Cointelegraph.

Governments issuing tokenized bonds must also collect know-your-customer (KYC) information to ensure that funds are directed to the proper recipients, she added.

The tokenized US Treasury market grew by over 50x since 2024, according to data from crypto analysis platform Token Terminal.

Source: CoinTelegraph