A pioneering initiative has been launched to distribute financial aid in the form of digital currency to underprivileged individuals. This program, supported by funds from a past cryptocurrency project, aims to explore the effects of direct, unconditional payments on alleviating poverty. The venture builds upon previous experiments with universal basic income, examining how such disbursements influence the economic well-being of recipients.
Cryptocurrency Payments Bolster Low-Income New Yorkers
In a groundbreaking move, a select group of 160 low-income residents in New York are now receiving financial support totaling $12,000, distributed as USDC stablecoin. This innovative project is spearheaded by GiveDirectly, a non-profit organization dedicated to combating poverty through direct cash transfers, and is generously funded by Coinbase, a prominent cryptocurrency exchange. The digital currency, USDC, is a stablecoin issued by Circle, a financial technology firm, known for its stability due to its direct peg to the U.S. dollar, making it a less volatile option compared to other cryptocurrencies like Bitcoin. The disbursements are structured with an initial lump sum of $8,000, followed by five subsequent payments of $800 each. Beneficiaries are granted flexibility in managing these funds: they can maintain the assets within their Coinbase accounts, transfer them to conventional banking institutions (with a nominal 1.75% fee for instant transactions), utilize a Coinbase-branded debit card, or convert the digital currency into physical cash via ATMs. This program, drawing inspiration from universal basic income models, seeks to understand the broader societal impacts of providing direct, unconditional financial aid to vulnerable populations. The funding for this project originates from the residual capital of Coinbase's former philanthropic endeavor, GiveCrypto, which concluded in 2023, allocating approximately $2.6 million to this current undertaking.
This pilot program represents a significant step in understanding the potential of digital currencies and direct financial aid as tools for social welfare. Its findings could offer valuable insights into new approaches to poverty reduction, influencing future policy decisions and philanthropic strategies.
