USDM1 (Republic of the Marshall Islands)

Research, firm shelf, model-client eligibility, and advisor selection are recorded separately. The scheduled date is the outside bound; new evidence can reopen the file sooner.

USDM1 is a bond of the Republic of the Marshall Islands. Its law firm, Cleary Gottlieb, describes a program of continuous Reg S offerings of ”tokenized perpetual adjustable-rate secured bonds,” up to an initial $100 million, first issued on 23 September 2025. The bonds exist only as book entries taken from token holdings, so the token is the bond. Each unit is redeemable at any time for one dollar. The Republic invests the sale proceeds in short US Treasuries, pledges them to a US trust company as collateral agent, and keeps part of their yield; the rest accrues to holders as new units. A holder therefore has two claims: one on the Republic, under a New York law indenture with a waiver of sovereign immunity, and a perfected security interest in the Treasuries. The design is sounder than a corporate stablecoin on paper, and the paper is the problem. The indenture, the offering memorandum and any report on the collateral are not published, so the coupon formula, the Republic’s share of the yield, the redemption mechanics and the collateral balance cannot be checked. On Ethereum one private key can upgrade the contract, freeze any address and grant itself the power to burn from any holder. The Republic has not registered USDM1 in the United States and sells it only under Regulation S, so a US client cannot buy it. We keep it as research only; it stays off client portfolios until it is offered to US investors and the indenture and collateral reports are public.

Research triggers: events that reopen the assessment or shelf decision
• The Republic offers USDM1 to US investors under a registration or a named exemption
• The indenture or offering memorandum is published, showing the rate formula, the Republic’s share of the yield and the redemption terms
• A collateral report or attestation shows pledged Treasuries at or above the supply on every chain
• The Ethereum owner key moves to a multisig or timelock, or the Republic publishes its contract addresses
• A par redemption is refused or delayed

The research file

What a holder owns

The obligor is the Republic itself, not a company or trust it set up. The Ministry of Finance says ”each unit of USDM1 represents a par-value sovereign obligation with enforceable rights against the sovereign, alongside a secured claim on the U.S. Treasury collateral.” Cleary Gottlieb, the Republic’s counsel, gives the legal form: perpetual adjustable-rate secured bonds, ”issued in dematerialized (electronic) and uncertificated form only, recorded in book-entry form based on the holdings of tokens issued on a blockchain network.” There is no separate register behind the chain and no transfer agent; the trustee, Surus Trust Company of North Carolina, administers the indenture and the collateral.

The bond has no maturity. Its only exit is par redemption: ”holders will be able to redeem each of their bonds at any time for one U.S. dollar.” Interest does not raise the price of a unit; Cleary says it ”will be capitalized periodically,” which means holders receive more units. On the Solana mint that CoinGecko lists, the Token-2022 interest-bearing setting showed 196 basis points a year on 23 September 2026, well under the yield on short Treasuries. That gap fits the program: the collateral yield ”after deducting a designated portion representing the Republic’s gain” goes to meet redemptions. The size of that portion is not published.

How the collateral protects a holder

The Republic invests each dollar raised in short US Treasuries held on a segregated basis by Surus and pledged to Surus as collateral agent. Under the Uniform Commercial Code the collateral agent holds a first-priority security interest perfected by control, for the benefit of bondholders. The Ministry calls this ”a dual-recourse structure - to the sovereign and to the collateral,” and models it on the Brady bonds of 1989, which were backed by Treasury zero-coupon bonds held in escrow.

The collateral matters more than the sovereign promise. A waiver of immunity under New York law lets a holder sue the Republic in New York and win a judgment, but collecting on a judgment against a state is slow and limited to commercial assets a court can reach, which a small state may not keep in New York. The Treasuries sit in the United States with a US trust company, under a lien the trustee can enforce without the Republic’s help. If the pledge is as described, a holder’s real exposure is to US Treasuries, to Surus as custodian, and to the terms of the indenture. None of those terms can be read: the indenture is not public, and we found no attestation of the collateral balance. The Ministry adds that ”No USDM1 can be created without collateral,” but no report shows the collateral matching the supply.

Who may hold it

The Republic sells USDM1 only offshore. Its site says it ”has not registered any offering of USDM1 under the US Securities Act,” and that USDM1 ”may not be offered, sold, pledged or otherwise transferred in the United States or to US investors” unless registered or exempt. Cleary calls the offerings Reg S. Inside the Marshall Islands the first holders are citizens: the ENRA basic-income program, paid from the Compact Trust Fund, began paying on 26 November 2025, and a citizen may take the payment in USDM1 through the Lomalo wallet on Stellar. Outside, the Ministry says it is ”enabling controlled access to USDM1 for qualified institutional counterparties,” on request through M1X Global, the Republic’s services provider. BitGo, Anchorage Digital and tZERO’s broker-dealer offer custody. No minimum is published.

Control on chain

The Republic names Stellar, Solana and Canton as chains but publishes no contract address. Only the Ethereum contract (0x90a1717e…) is tied to the program by a primary source: its verified implementation, USDM_V3, is signed ”@author M1 Global” and says it deploys the interest-bearing USDM1. It held about 177,000 units across 34 holders on 23 September 2026. It is an upgradeable proxy whose owner is one externally owned address, 0xc8b6df21…, which deployed it. That key can freeze and thaw any address, upgrade the code, and grant or revoke the minter-burner role; the role’s burn(from, amount) takes tokens from any holder, so the owner can burn a holder’s balance by granting the role to itself. Two contracts hold the role now, both deployed by the same key. The code forbids renouncing ownership.

Most of the supply is on Stellar: about 1.1 million units under the issuing account GDM5QWWX…, most of it inside Soroban contracts. That account sets no authorization, revocation or clawback flags and has one signer. The Solana mint has a single-key freeze authority. Neither address appears in any document of the Republic, so the eligibility file lists only the Ethereum contract until the Republic publishes its addresses.

Against the other dollar instruments on file

BENJI, BUIDL and USYC are fund shares: the holder owns a slice of a fund that owns Treasuries, under US securities law and with published holdings. USDY is a note of an Ondo company secured by Treasuries. USDM1 is the only one whose obligor is a state, and the only one whose governing document is private. A sovereign obligor adds little when the bond is fully secured, since the pledge carries the value; it adds risk where the terms give the Republic room, such as the adjustable rate and its share of the yield. Until the indenture is public, the comparison cannot be finished.

Sources

The claims above trace to these. Where a number could not be independently verified, the thesis says so.

• Cleary Gottlieb: Marshall Islands tokenized bond program (2025-11-19) · primary · accessed 2026-09-23
  Supports: Reg S, initial $100 million, perpetual adjustable-rate secured bonds, book-entry from token holdings, interest capitalized, par redemption any time, Republic’s gain deducted from collateral yield
• RMI Ministry of Finance: Financial Access and the Path to USDM1 (2025-12-15) · primary · accessed 2026-09-23
  Supports: sovereign obligation plus secured claim, New York law indenture and waiver, Surus as trustee, custodian and collateral agent, Brady model, ENRA and Lomalo, controlled access for institutions
• USDM1 disclosures · primary · accessed 2026-09-23
  Supports: not registered in the US, no US offer or transfer
• Surus: trustee, custodian and collateral agent for USDM1 (2026-04-09) · secondary · accessed 2026-09-23
  Supports: M1X Global exclusive services provider, Surus Trust Company, North Carolina
• tZERO: USDM1 in broker-dealer custody (2026-06-04) · secondary · accessed 2026-09-23
  Supports: Stellar, Canton and Solana, custody through tZERO
• USDM_V3 implementation on Ethereum (Blockscout verified source) · primary · accessed 2026-09-23
  Supports: @author M1 Global, owner freeze, upgrade, role grants, burn from any holder
• Stellar Horizon: USDM1 asset and issuing account · secondary · accessed 2026-09-23
  Supports: about 1.1 million units on Stellar, no authorization or clawback flags

Inherited controls

The research above describes the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The most administered layer sets the position’s effective control grade; that is a control description, not a quality or suitability score.