Young people in New York have started receiving encryption subsidies.

Source: Bloomberg

Original Title: What Happens If You Just Give People Cash – in Crypto

A brand new basic income pilot program is about to launch, which will pay low-income New Yorkers $12,000 worth of cryptocurrency to help them invest in significant expenses such as education and housing.

When Luis Acero was in his early 20s, he lost thousands of dollars due to a failed cryptocurrency investment. "I had no idea what I was doing at the time," he recalled.

This year, he is 25 years old, and while completing his university studies, he is also planning how to invest in his future.

So, when a friend told him about a new project: it would provide $12,000 to young low-income New Yorkers over the next five months, he was a bit hesitant. This is because the money would be distributed in the form of USDC stablecoin.

In the end, Asero realized that this opportunity was too good to miss, so he applied for the program.

Now, he is one of the 160 participants aged 18 to 30 from New York selected through a lottery; they received the first deposit into their Coinbase accounts last week.

The "Future Fund" customized for young people ###

Unlike before, this money will be distributed in the form of the USD-pegged stablecoin USDC, making this project the first experiment in the United States to distribute basic income in the form of cryptocurrency.

The program called "Future First" is executed by GiveDirectly, one of the world's largest direct cash transfer organizations, with funding coming from the cryptocurrency exchange Coinbase. According to Darin Carter, the U.S. Policy and Grassroots Advocacy Lead at Coinbase, this is not just financial support, but an opportunity "to provide cryptocurrency education to young New Yorkers and demonstrate how blockchain payments can have a positive impact."

The attempts by technology companies to promote the development of the digital economy through cryptocurrency donations have a long history, but the road ahead is not smooth.

In 2023, Coinbase shut down its own cryptocurrency donation project GiveCrypto, admitting that it "failed to create lasting change."

Fortune magazine reporter Leo Schwartz once exposed the deep-seated issues of the project: the strategy of relying on local "ambassadors" to distribute funds globally has led to a predicament of "logically chaotic coordination, misaligned guarantees, and unpaid labor."

Now, Coinbase has handed over the remaining $2.6 million in funds to the more specialized GiveDirectly, hoping to open a new chapter in cryptocurrency charity.

"We want to understand what unique opportunities and challenges providing unconditional basic income in the form of cryptocurrency would bring." Emma Kelsey, the U.S. project lead for GiveDirectly, stated that this research will also explore how this funding affects beneficiaries' decision-making and whether it can improve their housing and education choices.

This experiment comes at a critical moment for the American guaranteed income movement.

The core assertion of this movement is that directly distributing money to those in need without restrictions on its use is a more effective way to alleviate poverty.

However, existing research results are mixed—some projects have limited improvements in the physical and mental health of beneficiaries, while others have significantly reduced preterm birth rates and food insecurity issues.

The innovation of the New York experiment lies in its payment structure: a one-time payment of $8000 plus monthly installments of $800 for five months.

This design is based on the findings of GiveDirectly's experiment in Kenya in 2018—at that time, individuals who received large cash grants were more likely to start businesses and achieve higher income growth. "We hypothesize that a one-time payment model is equally effective for young people at this critical life stage," Kelsey explained.

Is ### a relief or a risk?

However, the involvement of cryptocurrency adds complexity to this originally "unconditional" aid.

Hillary Allen, a professor at American University's Washington College of Law, stated: "If funded in cryptocurrency, there are additional conditions."

Although USDC promises to be pegged to the US dollar, Allen pointed out that severe market shocks could still lead to a decoupling of its value. Moreover, the acceptance of stablecoins in everyday transactions remains limited—while retailers like Home Depot and Chipotle accept USDC through specific platforms, it is still not usable for paying rent or tuition.

The beneficiaries have several options:

• Transfer funds to a traditional bank account (instant transfer requires a 1.75% fee),
• Use Coinbase debit card for purchases,
• Withdraw cash from ATM,
• Or leave money in a Coinbase account to earn a 4.1% yield—this is where the real "temptation" lies.

"The essence of stablecoin design is to make it easier for beneficiaries to bet on Bitcoin with this money," Allen warned, "because it is stored in the wallet of a cryptocurrency exchange."

In this regard, Kelsey emphasized that they clearly informed about the risks of investing in other cryptocurrencies during the training: "We highlighted the risks of volatility and potential loss of principal, and do not encourage individuals to invest in risky assets."

At the same time, she pointed out that the advantage of using USDC lies in the extremely low transfer costs—distributing the first batch of $800 payments only cost 26 cents, far lower than the issuance cost of prepaid debit cards.

After the project ends, the organizers will assess whether cryptocurrencies provide a better option for low-income groups—who often lack bank accounts, have insufficient banking services, or distrust traditional financial institutions.

For 25-year-old student Luis Asero, concerns about cryptocurrency ultimately pale in comparison to the possibility of changing his fate.

"This money will bring me emotional and psychological peace," he said, "it will definitely help me get back on my feet." He plans to transfer most of the funds to his bank account to pay off debts, while setting aside a portion to continue learning about cryptocurrency investments. "This time I will try the right way," Aselo said, "I will not make the same mistakes again."

Conclusion

Faced with sky-high housing prices and heavy living expenses, the cryptocurrencies in the hands of these young New Yorkers act like a key – only no one knows whether it opens the door to a new life or another world full of uncertainties. As blockchain technology enters the struggles of ordinary people, this experimental record captures the essence of how this generation seeks a way out under pressure.