U.S. Housing Agency Evaluates the Possibility of a Crypto Initiative
ProPublica, an investigative newsroom that has won the Pulitzer Prize, has reported that the U.S. Department of Housing and Urban Development (HUD) is contemplating the use of cryptocurrency. This discussion was revealed through a meeting recording and insights from several officials involved. Some officials believe this could serve as a test for integrating cryptocurrency more broadly across federal agencies.
The discussions have raised concerns within HUD, primarily regarding the potential impact of paying federal grant recipients in cryptocurrency. Critics point out that cryptocurrency is an uninsured digital asset, vulnerable to extreme value fluctuations and often linked to criminal activity. The current focus appears to be on leveraging the technology behind cryptocurrency, known as blockchain, to track HUD grants more effectively. While supporters argue that blockchain can be advantageous for monitoring purposes, it’s widely recognized that its primary function has been for cryptocurrency transactions.
A HUD employee referenced the subprime mortgage crisis of 2008, expressing caution about reintroducing what they consider “another unregulated security” into the housing market. They argued that this initiative could do more harm than good. Discussions have also included the potential use of stablecoins, a type of cryptocurrency designed to maintain a stable value by being tethered to traditional assets. However, stablecoins have faced their share of volatility in the past.
Irving Dennis, HUD’s new principal deputy chief financial officer and a former partner at consulting firm EY (formerly known as Ernst & Young), seems to be a driving force behind this initiative. EY has also supported the proposal, with one of their executives having met with HUD officials recently to discuss the idea.
The crypto industry has some high-profile allies, including President Donald Trump, who has appointed cryptocurrency advocates to lead certain federal agencies. His administration has also backed off from investigating crypto companies and established a “strategic Bitcoin reserve.” Trump’s personal financial interests in cryptocurrency, along with discussions about a “crypto summit” with industry leaders, further indicate governmental shifts in attitudes toward digital assets.
The initiative at HUD hints at a new strategy to strengthen the cryptocurrency sector by integrating blockchain technology into federal budgeting and accounting practices. This aligns with the views of prominent figures like Elon Musk, who has suggested using blockchain to enhance federal financial oversight.
Despite this push, both Dennis and HUD spokesperson Kasey Lovett have denied that there are plans to implement blockchain or stablecoins. Lovett emphasized that while educational discussions are taking place, they don’t equate to actual implementation.
Meetings regarding the blockchain proposal have taken place within HUD, involving officials from various departments, particularly those managing significant federal grants. These grants are crucial for funding programs that provide essential services to low- and moderate-income populations. The CFO’s office is leading these discussions, indicating a significant interest in the blockchain idea.
In the meetings, there was mention of a “proof of concept” project to begin tracking grants with blockchain technology. However, some attendees were skeptical, questioning the necessity of such a project when existing systems already track grant spending effectively. A circulated memo after one meeting criticized the proposal as potentially dangerous and inefficient, asserting that introducing such technology would complicate processes and require extensive training.
Further discussions indicated mixed feelings, with some officials recognizing possible benefits, like improved data accuracy and real-time tracking. However, it was also noted that the motivation may stem more from the trendiness of blockchain rather than its practical benefits.
Experts in the cryptocurrency field have expressed strong criticism of the potential proposal. One former official from the U.S. Securities and Exchange Commission described the concept as “a terrible idea,” warning that using stablecoins could lead to significant losses in grant value. Concerns were raised about the dangerously volatile nature of cryptocurrency affecting essential funding for millions relying on HUD support.
Additionally, the skepticism around blockchain’s efficacy in government settings was echoed by others, noting that previous high-profile attempts to deploy this technology in other contexts have failed. The fear is that vulnerable populations relying on HUD funding could suffer the consequences of what some have labeled a reckless experiment.
