TLDR
- An idea is under consideration by HUD to pilot a blockchain-based system to track grants, potentially involving stablecoin transactions.
- Word has it that Irving Dennis, HUD's newly appointed principal deputy chief financial officer, is a major advocate for the proposal.
- Some in HUD view the proposal with skepticism, labeling it as 'risky and inefficient' as well as unnecessary.
- This initiative could serve as a preliminary test for incorporating blockchain and cryptocurrency technologies throughout the federal government.
- Support for cryptocurrency is strong within the Trump administration, with Treasury Secretary Scott Bessent having mentioned plans regarding a 'stablecoin framework.'
In a move that could herald the integration of cryptocurrency into governmental processes, HUD is reportedly probing the use of blockchain alongside possible stablecoin implementations to better manage grant allocations.
ProPublica first reported on March 7 HUD has reportedly conducted multiple meetings focusing on how blockchain might be employed to manage grants, including developing a 'proof of concept' project to keep tabs on funds issued to a particular grant recipient through this technology.
HUD's DOGE initiative is actively targeting and countering unnecessary expenditures of taxpayers' money, illustrating why HUD is committed to maintaining scrutiny over public spending. @POTUS Look forward to restructuring and revamping the government to deliver enhanced services to Americans. https://t.co/PWEBIM7cOD
— Sec. Turner Press Office (@SecTurnerPress) March 8, 2025
Reports suggest Irving Dennis, stepping into his new role at HUD as principal deputy CFO, advocates strongly for the blockchain initiative. Dennis has a background as the CFO at HUD during the first Trump administration and was a partner at Ernst & Young.
Discussions have surfaced at meetings on the potential for a blockchain system that might eventually involve dispensing payments to grant recipients via stablecoins. These are digital currencies created to preserve a consistent value by being tied to other assets, typically the U.S. dollar.
During a recorded meeting, an official described that they foresee a cryptocurrency connected to the U.S. dollar on a one-to-one scale. Another participant expressed that this system would mimic the characteristics of the dollar.
Exploring HUD's strategies for digital transformation.
The Community Planning and Development office (CPD), responsible for managing substantial grant money for initiatives like affordable housing and disaster relief, has been pinpointed as a starting place for these blockchain trials. Officials have talked about tracking the flow of grants to one specific CPD partner, with possibilities for including further sub-recipients within the blockchain system.
Concerns within HUD about the project are being aired. One official shared a memo, calling the endeavor 'risky and inefficient' and likening cryptocurrency to 'monopoly money.'
There is worry within the department regarding the introduction of unregulated digital assets into federal housing programs. “It feels like bringing in yet another unregulated security into the housing sector, reminiscent of the collapse in 2008, 2009,” one staffer lamented.
External authorities have expressed doubts as well. Corey Frayer, previously an SEC authority and now a member of the Consumer Federation of America, has branded the plan 'a dreadful idea' and cautioned about potential value instability, even with stablecoins.
Hilary Allen, an American University law professor specializing in financial regulation and technology, questioned the feasibility of employing blockchain for federal grants, criticizing the government’s adoption of a technology that has yet to find substantial non-cryptocurrency uses.
Despite these issues, some personnel perceive potential advantages. Certain individuals in discussions maintained that blockchain could enhance accuracy and speed in monitoring how recipients use grant funds.
A finance official at one of the gatherings shared intentions of escalating the blockchain platform beyond just the CPD. “This could have implications for our entire agency. We chose to begin with the CPD for the initial phase,” followed by contemplation of similar implementation within the Office of Public and Indian Housing, which supports a significant portion of the population in public and federally-assisted residences.
HUD spokesperson Kasey Lovett has firmly stated that the agency does not have definite plans to establish blockchain or stablecoin mechanisms. “The department is not proceeding with any blockchain or stablecoin projects,” Lovett emphasized in dialogue with ProPublica. “There is a difference between educational exploration and actual execution.”
HUD’s endeavor to explore blockchain solutions corresponds with the Trump administration's broader cryptocurrency advocacy. The president has positioned industry allies at the helms of federal offices, alongside the creation of a 'strategic Bitcoin reserve.'
Treasury Secretary Scott Bessent voiceouted at a White House Cryptocurrency Summit held on March 7, stressing the significance of crafting a thoughtful 'stablecoin regime' to preserve the U.S. dollar’s leading role globally.
According to two individuals who supplied information to ProPublica, HUD's blockchain pilot could be a precursor to a broader cryptocurrency application across the federal government, aligning with insights on Trump adviser Elon Musk’s reportedly vested interest in using blockchain to keep federal expenditure under observation.
Though blockchain has previously been an area of interest for diverse government functions, critiques point out that the scope of HUD's recent discussions exceeds former attempts.
Reinforcement of the administration’s involvement with the topic came as the White House convened an industry summit focused on crypto on March 7, associated with the unveiling of a 'strategic Bitcoin reserve.' Notably, Bitcoin's price saw a $5,000 decrease following these announcements.
Ongoing talks within HUD bring the challenge of blending technological innovation with its obligation to continue delivering stable housing support to those in need. Detractors fear that engaging with volatile digital currencies might jeopardize critical housing projects.
Proponents believe that incorporating blockchain into grant operations could lead to greater openness and improved processes. However, specifics on how these changes will unfold, particularly the transition to cryptocurrency-based payments, remain unspecified.
