Trump Administration Housing Agency Examines Blockchain Implementation


TLDR

  • HUD is considering a blockchain experiment for monitoring grants, possibly involving stablecoin payments
  • The proposal is reportedly being pushed by Irving Dennis, HUD’s new principal deputy chief financial officer
  • Some HUD officials have criticized the plan as “dangerous and inefficient” and unnecessary
  • The initiative could be a trial run for blockchain/crypto use across the federal government
  • The Trump administration has been supportive of cryptocurrency, with Treasury Secretary Scott Bessent mentioning plans for a “stablecoin regime”

The Department of Housing and Urban Development (HUD) is exploring the use of blockchain technology and possibly stablecoins to track and distribute grants, according to recent reports. The initiative, which has sparked debate within the agency, could represent the first step toward incorporating cryptocurrency into federal government operations.

ProPublica first reported on March 7 that HUD officials have held at least two meetings about implementing a blockchain system to monitor grants. The discussions have focused on creating a “proof of concept” project that would track funding to a single grant recipient using blockchain technology.

The proposal is reportedly being championed by Irving Dennis, HUD’s new principal deputy chief financial officer. Dennis previously served as HUD CFO during the first Trump administration and is a former partner at consulting firm EY (Ernst & Young).

Some officials at the meetings suggested the blockchain system might eventually involve paying grantees with a stablecoin. Stablecoins are cryptocurrencies designed to maintain a stable value by being pegged to another asset, typically the U.S. dollar.

“It would basically be a cryptocurrency that is linked to the U.S. dollar on a one-for-one basis,” one official said during a recorded meeting reviewed by ProPublica. Another mentioned the system would “simulate the dollar.”

Inside HUD’s Digital Transformation Plans

The Community Planning and Development office (CPD), which oversees billions in grants for affordable housing, homeless shelters, and disaster recovery, has been identified as the starting point for this experiment. Officials discussed tracking a single CPD grant recipient and possibly sub-recipients on the blockchain.

Some HUD staffers have raised serious concerns about the proposal. One official authored a memo describing the idea as “dangerous and inefficient” and compared cryptocurrency to “monopoly money.”

Critics within the department worry about introducing unregulated digital assets into federal housing programs. “It’s just introducing another unregulated security into the housing market as though 2008, 2009 didn’t happen,” one HUD staffer told ProPublica.

External experts have also expressed skepticism. Corey Frayer, a former SEC official now with the Consumer Federation of America, called it “a terrible idea” and warned about potential value fluctuations even with stablecoins.

Hilary Allen, a law professor at American University who studies financial regulation and technology, questioned the practicality of using blockchain for government grants. She characterized the proposal as forcing the government to use technology that has struggled to find practical applications beyond cryptocurrency.

Despite these concerns, some officials see potential benefits. Certain meeting attendees suggested blockchain could reduce inaccurate data from grant recipients and enable real-time monitoring of their spending.

A finance official at one meeting indicated plans to expand the blockchain system beyond CPD. “We are looking at this for the entire enterprise. We just wanted to start in CPD,” the official said, adding that HUD is also considering implementing the technology in the Office of Public and Indian Housing, which serves millions of people in public and federally subsidized housing.

HUD spokesperson Kasey Lovett has denied that the department has concrete plans to implement blockchain or stablecoin systems. “The department has no plans for blockchain or stablecoin,” Lovett told ProPublica. “Education is not implementation.”

The consideration of blockchain technology at HUD aligns with the broader cryptocurrency-friendly stance of the Trump administration. President Trump has appointed industry supporters to lead federal agencies and created a “strategic Bitcoin reserve.”

Treasury Secretary Scott Bessent stated at a White House Crypto Summit on March 7 that the government would “put a lot of thought into the stablecoin regime” to maintain U.S. dollar dominance in global markets.

According to two officials who spoke with ProPublica, the HUD blockchain experiment could be a trial run for the eventual use of cryptocurrency across the entire federal government. This move would align with Trump adviser Elon Musk’s reported interest in using blockchain to monitor federal spending.

While federal agencies have previously explored blockchain for various purposes, observers note that HUD’s current discussions represent a broader application of the technology than previous government initiatives.

The White House hosted a “crypto summit” with industry leaders on March 7, further demonstrating the administration’s engagement with cryptocurrency. This summit occurred just one day after the announcement of a “strategic Bitcoin reserve,” which was followed by a sharp $5,000 drop in Bitcoin’s value.

As discussions continue within HUD, the department faces the challenge of balancing technological innovation with its responsibility to provide stable housing assistance to vulnerable populations. Critics worry that experimenting with volatile digital assets could put essential housing programs at risk.

Proponents argue that blockchain could increase transparency and efficiency in grant management. However, many details about the implementation remain unclear, including whether and when HUD might begin paying grantees with cryptocurrency instead of dollars.



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