Some New Yorkers are now getting crypto as a social safety net.
Coinbase, the leading cryptocurrency exchange, donated funds to a nonprofit organization after shuttering its own philanthropy initiative two years ago.
Now, that nonprofit organization is using the money to fund a cash transfer pilot program in New York City, where 160 residents will receive a total of $12,000 in crypto over a five-month period.
Participants began receiving $800 a month in USDC, a stablecoin worth about one US dollar, in September. They also received an $8,000 lump sum, distributed in November. The program ends in February.
The program is similar to the guaranteed basic income experiments flourishing around the US and the world. In such programs, a government distributes no-strings-attached payments over a period of time to a targeted group of residents. Guaranteed basic income programs often require participants to meet specific criteria, such as a household income that falls near the poverty line. They differ from a universal basic income, which offers monthly payments to entire populations regardless of socioeconomic status.
Emma Kelsey, the program lead for the New York cash transfer pilot, told Business Insider that the decision to provide a lump sum, which is a departure from classic basic income schemes, was based on research showing that larger sums over shorter periods can yield greater returns.
“A lot of the research in our international work and in the US has shown that a lump sum could allow people to invest or do things that might have higher costs, like a security deposit or sign up for an education or training program,” Kelsey said. “But, also, it’s something that we’ve heard from participants is a preference.”
Kelsey referenced a separate GiveDirectly program in Georgia called In Her Hands.
“We did a lot of community research and heard from them that this lump sum approach could be more valuable for them versus a standard recurring payment model,” she said.
GiveDirectly’s decision to use crypto is a departure from other pilot programs experimenting with such payments, but so far, Kelsey said, the process is similar.
“We are really interested to see if people use it differently,” Kelsey said. “Do they perceive it differently? Is it more or less useful to them?”
Kelsey said GiveDirectly chose New York City, in part, because of local support from politicians.
“We chose New York, in particular the South Bronx and East Harlem, because there are incredibly low-income areas,” she said. “There has also been support from politicians in the area around crypto, making it accessible. It seems like a really natural fit where the need was high, but also the ecosystem around crypto had more support than in some other areas.”
Residents in those neighborhoods may also be more willing to use crypto in comparison to traditional banking, Kelsey said.
“We thought it would be a good opportunity to see if this type of payment modality would be viewed favorably,” she said.
