NEW YORK —
Coinbase has launched a new pilot program designed to distribute
financial aid via cryptocurrency to low-income residents of New York
City. The initiative, dubbed "Future First," aims to provide immediate
financial relief while simultaneously studying the efficacy of
blockchain technology in aid distribution.
The "Future First" Initiative
Managed
by the non-profit organization GiveDirectly, the pilot has selected 160
New Yorkers to receive a total of $12,000 each. The funds are being
distributed in USDC, the stablecoin issued by Circle which is pegged to
the U.S. dollar. Crucially, the program is unconditional, meaning there
are no restrictions on how the recipients may spend the funds.
The
disbursement structure is front-loaded to maximize immediate impact.
Participants receive an initial lump sum of $8,000, followed by five
monthly installments of $800. GiveDirectly is leveraging its extensive
experience with similar direct-cash programs in regions including Kenya,
Liberia, Rwanda, and Mozambique.
Efficiency vs. Speculation Risk
The
experiment seeks to answer two primary questions: how unconditional
cash affects the lives of recipients, and whether cryptocurrency is a
viable rail for distributing social aid.
Emma
Kelsey of GiveDirectly highlighted the efficiency of the blockchain
rails, noting that the transaction fees to issue the first round of $800
payments totaled less than 30 cents. At the conclusion of the pilot,
the organization plans to survey participants to determine whether the
use of crypto wallets facilitated or hindered their ability to manage
the funds.
However,
the delivery method has drawn scrutiny from academic observers. Hilary
Allen, a law professor at American University’s Washington College of
Law, told Bloomberg that distributing aid through crypto platforms could inadvertently expose vulnerable recipients to volatile markets.
"I
would say that giving money in this way is designed to grease the skids
into Bitcoin," Allen argued, suggesting that because the funds sit
within a crypto exchange environment, beneficiaries might be nudged
toward speculative trading rather than using the funds for basic needs.
Testing the Rails for an AI Future
The
pilot comes as the conversation around Universal Basic Income (UBI)
gains renewed traction, driven largely by fears that Artificial
Intelligence (AI) could displace significant portions of the entry-level
workforce. If successful, Coinbase aims to use the data to demonstrate
the versatility and stability of blockchain technology as a tool for
social safety nets, particularly for individuals who have had little
prior contact with the technology.
LATEST DEVELOPMENTS & MARKET CONTEXT
Stablecoin Regulation Heats Up
This
pilot launches against a backdrop of intensifying regulatory focus on
stablecoins in the United States. With the "Clarity for Payment
Stablecoins Act" making its way through legislative discussions,
real-world use cases for USDC—such as aid distribution—are being closely
watched by lawmakers to determine if these assets can function safely
outside of speculative trading.The Rise of "Crypto Philanthropy"
The
"Future First" initiative is part of a broader trend of
crypto-philanthropy. In recent years, donation platforms have
increasingly integrated blockchain solutions to increase transparency
and reduce overhead costs associated with cross-border aid, though
domestic U.S. programs remain relatively rare.Coinbase's Public Image Push
Analysts
view this move as part of Coinbase’s broader strategy to normalize
cryptocurrency use in daily life. By associating digital assets with
social good and poverty alleviation, the company is attempting to shift
the narrative away from regulatory lawsuits and market volatility,
presenting crypto as essential financial infrastructure.
FREQUENTLY ASKED QUESTIONS (FAQ)
Q: What is the "Future First" project?
A:
It is a Universal Basic Income (UBI) pilot funded by Coinbase and
managed by GiveDirectly, designed to provide financial support to
low-income citizens using cryptocurrency.Q: How much money will participants receive?
A: Each of the 160 selected participants will receive a total of $12,000 in USDC (Circle’s stablecoin).Q: How is the money distributed?
A: The funds are paid out in six installments: an initial lump sum of $8,000, followed by five monthly payments of $800.
Q: What is the criticism regarding paying in crypto?
A:
Critics, such as law professor Hilary Allen, worry that delivering aid
via a crypto platform might encourage financially vulnerable recipients
to speculate on volatile assets like Bitcoin instead of using the
stablecoin for living expenses.
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