On‑chain Public Benefits Are the Future, but Compliance Hurdles Persist, Says CEO
By [Your Name], February 14 2026 – Cointelegraph
Governments are increasingly looking to blockchain as a conduit for delivering social assistance, yet regulators warn that anti‑money‑laundering (AML) and sanctions‑related obligations still pose significant obstacles. Julie Myers Wood, chief executive of compliance‑focused consultancy Guidepost Solutions, explained to Cointelegraph that while the technology promises speed and transparency, “any program that is still processed through paper‑based channels should be examined for a digital alternative” because it can accelerate payouts and create an immutable audit trail.
A real‑world test: Marshall Islands’ tokenized UBI
The Republic of the Marshall Islands, with guidance from Guidepost Solutions, issued a US‑dollar‑denominated tokenized bond (USDM 1) that is fully collateralised by short‑term U.S. Treasury securities. The proceeds funded a universal basic income (UBI) scheme launched in November 2025, which credits beneficiaries’ mobile wallets on a quarterly basis. The pilot demonstrates how on‑chain distribution can eliminate the lag and paperwork typical of conventional welfare systems.
Why governments are eyeing tokenized debt
Across the globe, policymakers are assessing tokenised sovereign debt as a way to cut settlement times, lower transaction fees and bypass traditional intermediaries. Recent pilots in the United Kingdom—where HSBC is testing a digital gilt—and in Hong Kong, where regulators are drafting stable‑coin licensing frameworks, illustrate a broader trend toward “digitally native” public finance.
The allure is clear:
- Near‑instant settlement – blockchain can settle trades in seconds rather than days.
- Reduced costs – the removal of custodians and clearing houses trims fees.
- Fractional ownership – investors can buy small slices of government debt, widening participation.
Token Terminal data shows the market for tokenised U.S. Treasury securities has expanded more than 50‑fold since 2024, and industry analysts such as Lamine Brahimi of Taurus SA forecast the overall tokenised bond sector could reach roughly $300 billion by 2030.
Compliance remains the Achilles’ heel
Wood cautioned that the rapid expansion of on‑chain public‑benefit programs brings regulatory complexities to the fore. Governments must still adhere to existing AML directives and sanctions regimes, meaning robust know‑your‑customer (KYC) procedures are required to verify that funds are delivered to eligible recipients. Failure to integrate these controls could expose sovereign issuers to legal and reputational risks.
“Even though the technology simplifies settlement, the compliance layer can’t be an afterthought,” Wood said. “Regulators expect the same level of scrutiny on a blockchain transaction as they do on a conventional wire.”
Market analysis
- Growth momentum – The surge in tokenised treasury issuance suggests institutional confidence in the security and liquidity of on‑chain assets.
- Policy lag – While many jurisdictions are experimenting with digital bonds, comprehensive regulatory guidance—especially around cross‑border AML and sanctions—has yet to be codified.
- Adoption curve – Early adopters like the Marshall Islands are likely to serve as proof‑of‑concept for larger economies, but scaling will depend on the ability to meet compliance thresholds without eroding the cost advantages of blockchain.
Key takeaways
- On‑chain delivery accelerates public‑benefit payouts and creates transparent, traceable records, addressing long‑standing inefficiencies in welfare distribution.
- Regulatory compliance (AML, sanctions, KYC) is the primary barrier to widespread adoption of tokenised sovereign debt for social programs.
- Market size is expanding rapidly, with tokenised U.S. Treasury products up over 50× since 2024 and forecasts of a $300 billion tokenised bond market by the end of the decade.
- Government pilots are essential for ironing out technical and legal challenges, and success stories such as the Marshall Islands’ UBI scheme will likely influence policy in larger economies.
As blockchain continues to intersect with public finance, the industry will need to bridge the gap between technological promise and regulatory certainty. The next wave of digital sovereign instruments will hinge on whether policymakers can craft frameworks that preserve the efficiency gains of on‑chain settlement while safeguarding against illicit activity.
Source: https://cointelegraph.com/news/all-social-benefit-programs-onchain?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
