The American Housing and Urban Development Department plans to take a first step for the use of cryptocurrency, according to a registration meeting and other documents examined by Propublica and three familiar officials with the issue. Two officials told Propublica that they thought that the initiative could be a trial for the use of the crypto through the federal government.
The discussions have aroused concerns among some in the department, in particular concerning the prospect of paying the beneficiaries of the main federal subsidies in cryptocurrency, an uninsured digital asset associated with financial speculation, dramatic fluctuations of value and transnational crime.
Until now, discussions have been focused on using underlying technology that makes cryptography possible – Blockchain – to monitor HUD subsidies. Blockchain defenders argue that technology alone is valuable for such purposes. But the main use of blockchain, according to experts, concerns cryptographic transactions.
“It is simply a question of introducing another unregulated guarantee on the housing market as if 2008, 2009 had not occurred,” said a member of HUD staff, referring to the mortgage crisis. “I don’t see any way that will help anything. I see a lot of ways to hurt, “said the official who, like others in this article, spoke under the guise of anonymity for fear of remuneration. HUD discussions have covered the potential use of a stablecoin, a form of crypto which is fixed to another asset to avoid wild oscillations, although such oscillations have occurred in the past.
The idea of the blockchain is pushed, said a HUD official to his colleagues by Irving Dennis. Dennis, the new main assistant financial director of the agency, is a former partner of the World Giant of the EY Council, also commonly known by its original name, Ernst & Young. EY himself is also involved in the proposal: a company’s executive discussed the idea with HUD officials last month.
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The cryptography industry has found an ally in President Donald Trump, whose administration has typed industry boosters to lead federal agencies, supported surveys on cryptographic companies and created a “strategic bitcoin reserve”. (Bitcoin plunged $ 5,000 in the hour following the news of the reserve opening on Thursday.) Trump himself has significant financial interests in the crypto. Friday, the White House is expected to organize a “summit of cryptography” with leading figures from industry.
HUD’s proposal indicates a new way that the administration can seek to strengthen the industry: by incorporating the blockchain and possibly cryptocurrency in expenditure practices and routine accounting of federal agencies. This is a decision that would align with the apparent desire of adviser Trump, Elon Musk, to use the blockchain to monitor federal expenses.
The spokesperson for Dennis and Hud, Kasey Lovett, both denied the accounts of their colleagues. “The department does not intend to blockchain or stablecoin,” said Lovett. “Education is not the implementation.”
Robert Judson, EY’s executive involved in conversations, confirmed that they had taken place. “As a business, we had discussions with some individuals from this agency,” he said when he was reached by phone. Judson told Propublica that he would ask EY’s approval for a full interview, then did not recall.
The White House, Ey and Musk did not respond to requests for comments.
HUD officials kept at least two meetings on the blockchain’s proposal last month. A list of participants in the first meeting included staff members of CFO offices and community planning and development. The CPD administers billions of dollars of subsidies that support people with low and moderate, including funding to develop affordable housing, directing homeless shelters, supporting a resumption after sinister, moving survivors of domestic violence and building parks, sewers and community centers. It was the CFO office that called for the meeting, a person told Propublica.
EY Judson. For years, Judson pleaded for the blockchain, a large digital book which creates an immutable recording of transactions recorded on several computers. Technology boosters have thrown it as a way to reduce intermediaries such as banks and credit card companies in financial transactions and make these transactions more transparent and secure. Judson wrote that blockchain can help organizations prevent money from being siphoned for involuntary purposes. “While digital assets such as stable parts or digital currencies set up, more powerful applications will emerge for an integrated exchange of value,” he wrote. Dennis, who was HUD financial director in the first Trump administration, also wrote, in a book in 2021, that the agency should use technology such as “blockchain, robotics and new generation financial management systems”.
Stablecoins are supported by reserves, including traditional currency, basic products and treasure titles. This is supposed to guarantee that their value – unlike that, say, Bitcoin – does not fluctuate. However, on several high -level occasions, the value of the stablecoins did exactly that.
During the HUD meeting, the participants discussed a project of “proof of concept” in which the CPDs would begin to follow the funding in a single recipient of CPD grant and possibly sub-brewer of the blockchain. The need for the project was “not well articulated,” wrote a participant later in the meeting notes.
After the meeting, a HUD official wrote and broadcast a note within the agency by panicing the idea. “Without exaggeration, each implementation imaginable to Hud seems dangerous and ineffective,” said the memo.
HUD has no difficulty following grant expenses, noted the note, which makes new technology unnecessary. Incorporating it would be long, complicated and would require in -depth training. And, if the project involved paying the beneficiaries in cryptocurrency instead of dollars, it would inject volatility and unpredictability in the funding flow, even if the currency was a stablecoin.
During subsequent discussions with HUD staff, the author of the service note described the proposal as a “bridgehead” to HUD for the introduction of cryptocurrency, that the author in relation to “monopoly”.
DPC officials continued to raise concerns at a follow -up meeting, a recording of which was examined by Propublica. (Judson did not attend it.) Some participants saw the merit in the idea of blockchain, suggesting that this could reduce the inaccurate data of the beneficiaries of subsidies and allow real-time reports and monitoring of their expenses.
“Maybe there is something we could get from it,” said one of them, “especially if we have the impression that the wider federal government is heading for a sort of stablecoin option in the future.”
An official asked why the agency was considering the project. “Because it’s sexy,” said someone. Another said, “IRV asked us to continue the blockchain, which is why we look at it,” referring to Dennis.
Many details have remained unexplained during the meeting, in particular, especially, if the proposal would involve paying beneficiaries in cryptocurrency. But some have pointed out that it was.
“You can do it with what would be attached to a stable currency. It would be the treasure, and I think they are already going this way, for what it is worth, “said a manager. “That would simulate the dollar.”
Another added: “It would essentially be a cryptocurrency linked to the US dollar on one basis one for one.”
A finance official suggested that the idea could be applied more widely through the HUD. “We examine this for the whole business. We just wanted to start in CPDs, “he said. The agency also plans the idea of the public and Indian housing office, he said, for “the eligibility for tenants and things like that”. This office serves the millions of people who live in public housing and subsidized by the federal government.
This is not the first time that federal officials have been planning to incorporate blockchain into government work. Agencies such as the Treasury Department, the Ministry of Commerce and even the HUD have been involved in a study, a prototype and a working group in recent years. But those who monitor the cryptographic industry were not aware of such a broad application of technology in the federal government as what HUD officials recently discussed.
Some crypto experts were doubtful. “This is a terrible idea,” said Corey Frayer, former head of Securities and Exchange American Commission, where he focused on cryptographic markets and financial stability. “It is absolutely wild that anyone having a meaning would consider this.”
Frayer, now to consumer it Federation of America, warned that HUD subsidies paid in stable could fall. He expressed the greatest concern about the idea that the proposal could extend to other parts of the agency. If this included, for example, the introduction of stablecoin in the $ 1.3 billion of mortgage insurance provided by the Federal Housing Administration, a fluctuation in the value of Stablecoin could have a major economic impact, he said.
“Imagine a world in which all the participation of the government in the housing industry, all the funds circulating in this environment, fell worth 13%,” he said, citing an episode in 2023 in which a Stablecoin briefly dropped 13 cents below the dollar. “It is difficult to imagine that it would not be catastrophic.”
Hilary Allen, professor of law at the American university who research financial regulations and technology, noted that certain high-level attempts to use blockchain for ends unrelated to cryptocurrency failed. It expressed skepticism that technology would get out of it better in the context of government grants, where bad results could harm those who depend on HUD funding to survive.
“Blockchain technology has been around for 15 years. No one wants to use it. And now we have an attempt to force the government to use it, “she said, with” the most vulnerable people “serving” as a guinea pig “.
Mollie Simon contributed to research.
