TLDR
- Trump administration plans to rename USAID to US International Humanitarian Assistance (IHA) and bring it under direct State Department control
- The reorganization includes implementing blockchain technology for aid distribution to increase security, transparency, and traceability
- USAID has faced major disruptions with staff placed on administrative leave and funding cuts since Trump’s second term began
- Experts question the necessity of blockchain for humanitarian aid, suggesting existing tools may be equally effective
- Elon Musk’s Department of Government Efficiency (DOGE) has been involved in USAID restructuring plans
Recent Changes at USAID
The Trump administration is moving forward with plans to overhaul the United States Agency for International Development (USAID), according to an internal State Department memo reviewed by WIRED. The plan includes renaming the agency to US International Humanitarian Assistance (IHA) and placing it directly under the secretary of state’s control.
This restructuring comes shortly after President Trump’s inauguration, when the State Department put all USAID staff on administrative leave. Many payments to partner organizations around the world were halted, including those providing life-saving services.
Blockchain Integration
A key part of the reorganization is the integration of blockchain technology into USAID’s procurement and distribution processes.
According to the memo, “All distributions would also be secured and traced via blockchain technology to radically increase security, transparency, and traceability.”
The administration believes this approach will “encourage innovation and efficiency among implementing partners.” It also aims to create “more flexible and responsive programming focused on tangible impact rather than simply completing activities and inputs.”
Details Remain Unclear
The memo does not provide specific details about how blockchain would be implemented. It doesn’t clarify if this would involve cryptocurrency or stablecoin transfers, or simply using a blockchain ledger to track aid disbursement.
These plans have caught many USAID staffers off guard. The lack of clarity has added to the uncertainty they already face about the agency’s future.
Expert Skepticism
Experts in humanitarian technology express doubt about the need for blockchain in foreign aid. Linda Raftree, a consultant who helps humanitarian organizations adopt new technology, called it “a fake technological solution for a problem that doesn’t exist.”
Raftree added that she has never found “an instance where people were using blockchain where they couldn’t use existing tools.” This view reflects broader skepticism in the humanitarian sector about blockchain adoption.
Limited Proven Benefits
Giulio Coppi, a senior humanitarian officer at Access Now, points out that blockchain technologies offer “no proven advantage” over existing systems. He notes there’s no evidence “that it’s cheaper or better” than current tools.
Coppi describes the administration’s approach as “tech solutionist” – an approach that has “been proven over and over again to not have any substantial impact in reality.” This suggests the technology may add complexity without clear benefits.
Despite the skepticism, there have been some successful blockchain implementations in humanitarian work. In 2022, the United Nations High Commissioner for Refugees ran a small pilot using stablecoin to provide cash assistance to Ukrainians displaced by the Russia-Ukraine war.
Other pilots have been tested in Kenya by the Kenya Red Cross Society. The International Committee of the Red Cross has also helped develop the Humanitarian Token Solution.
Potential Benefits
An unnamed representative from an NGO that uses blockchain technology suggested that stablecoins can sometimes provide faster and easier money transfers to disaster-affected communities. This could be valuable in crisis situations where speed is critical.
However, the same representative cautioned that “introducing new systems means you’re setting up a new burden” for USAID partner organizations. This burden would fall hardest on smaller NGOs working on the front lines of disaster response.
The DOGE Connection
The reorganization of USAID appears connected to the Department of Government Efficiency (DOGE), effectively headed by Elon Musk. DOGE targeted USAID early in Trump’s second term.
According to Bloomberg, Musk has been exploring blockchain technology to enhance various US government processes. His focus includes improving tracking of federal expenditures, securing data, and streamlining payments.
The administration’s plans face legal obstacles. A federal judge has issued a preliminary injunction against the dismantling of USAID, temporarily halting some aspects of the reorganization.
Despite this legal challenge, the internal memo indicates the administration intends to continue “its mission of drastically cutting USAID and fully folding it into the State Department.” The outcome of these legal battles will likely shape the agency’s future.
Performance-Based Funding
The memo also suggests a shift toward performance-based funding models. It proposes “tying payment to outcomes and results rather than inputs” to ensure “taxpayer dollars deliver maximum impact.”
This approach, combined with blockchain tracking, appears aimed at exerting tighter controls over how aid money is spent. It represents a fundamental shift in how USAID has traditionally operated.
The implementation of blockchain technology could create additional challenges for smaller organizations that partner with USAID. These groups often have limited technical resources and expertise.
An NGO representative noted that “the relative cost of new systems is harder for small NGOs.” This raises questions about whether the new technology could inadvertently favor larger partners over local organizations.
Future Implementation Timeline
The memo does not provide a clear timeline for when these changes would take effect. With ongoing legal challenges and staff uncertainty, the path forward remains unclear.
The administration must navigate these challenges while addressing concerns from experts and stakeholders about the practical implementation of blockchain in humanitarian settings.
Impact on Global Aid Recipients
Millions of people worldwide rely on USAID-funded programs for essential services and support. Any disruption or change to these programs could have wide-reaching effects.
The administration’s focus on blockchain and restructuring comes at a time when global humanitarian needs remain high. How these changes will affect aid recipients remains to be seen.
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