Trump Administration Plans USAID Restructuring with Blockchain Integration

TLDR

• Trump administration plans to restructure USAID into US International Humanitarian Assistance (IHA) under State Department control
• The reorganization includes implementing blockchain technology for aid distribution tracking
• Thousands of USAID employees have been placed on administrative leave and many foreign aid contracts terminated
• Experts question the necessity of blockchain, suggesting existing tools could accomplish the same goals
• The plan aims to focus aid on global health, food security, disaster response, and countering China

The Trump administration has revealed plans for a major restructuring of the United States Agency for International Development (USAID), including renaming it, placing it under direct State Department control, and implementing blockchain technology to track aid distribution.

According to an internal State Department memo reviewed by WIRED, USAID will be renamed as US International Humanitarian Assistance (IHA). This change comes as part of broader reforms targeting the 60-year-old agency.

The memo states that the reorganized agency will “leverage blockchain technology” in its procurement processes. “All distributions would also be secured and traced via blockchain technology to radically increase security, transparency, and traceability,” the document reads.

The technology implementation aims to encourage innovation among partners. It would also allow for more flexible programming focused on measurable impact rather than simply completing activities, according to the memo.

The document does not specify exactly how the blockchain technology would be used. It remains unclear whether the plan involves cryptocurrency transactions, stablecoins, or simply using blockchain as a ledger to track aid disbursement.

This announcement follows major disruptions at USAID. Shortly after Trump’s inauguration, the State Department placed all agency staff on administrative leave and halted payments to numerous partner organizations worldwide.

The agency was an early target of the Department of Government Efficiency (DOGE). This initiative is effectively headed by Elon Musk, who has been exploring blockchain technology to enhance various US governmental processes.

Agency Workforce Reduction

Thousands of USAID employees were sent home globally. This action stopped nearly all foreign aid programs and created widespread uncertainty among staff and partner organizations.

Many contracts deemed nonessential were terminated. This included organizations providing what some described as lifesaving work in various regions around the world.

A federal judge has since issued a preliminary injunction against the dismantling of the agency. However, the memo suggests the administration plans to continue drastically cutting USAID and folding it into the State Department.

The plans for incorporating blockchain technology have caught many staffers off guard. Experts in the humanitarian sector express skepticism about the necessity of such technology for aid distribution.

Linda Raftree, a consultant who helps humanitarian organizations adopt new technology, questioned the need for blockchain. “It feels like a fake technological solution for a problem that doesn’t exist,” she told WIRED.

Raftree added that she has never found an instance where blockchain offered advantages over existing tools. “I don’t think we were ever able to find an instance where people were using blockchain where they couldn’t use existing tools.”

Giulio Coppi, a senior humanitarian officer at Access Now, shared similar concerns. “There’s no proven advantage that it’s cheaper or better,” he said, describing the approach as “tech solutionist” without substantial real-world impact.

Despite these criticisms, there have been some examples of blockchain use in humanitarian work. In 2022, the United Nations High Commissioner for Refugees ran a small pilot providing cash assistance to displaced Ukrainians using stablecoins.

Other pilot programs have been tested in Kenya by the Kenya Red Cross Society. The International Committee of the Red Cross also helped develop the Humanitarian Token Solution.

One unnamed representative from an NGO that uses blockchain technology noted that stablecoins can sometimes provide faster money transfers in disaster areas. However, they cautioned that “introducing new systems means you’re setting up a new burden” for smaller organizations.

The restructuring proposal suggests funding should be contingent on outcomes rather than inputs. “Tying payment to outcomes and results rather than inputs would ensure taxpayer dollars deliver maximum impact,” the memo states.

Some USAID employees point out that many contracts already function this way. Organizations are often paid after completing their work rather than receiving funding upfront.

However, a USAID employee who requested anonymity noted that such arrangements aren’t always practical. “Those kinds of agreements are often not flexible enough for the environments we work in,” they explained, pointing out that conditions in conflict or disaster zones can change rapidly.

The Trump administration’s plan aims to focus USAID on areas deemed crucial to U.S. interests. These include global health, food security, disaster response, and countering China’s influence.

The proposal argues that current development programs are “inefficient and fragmented.” It claims they are spread too thin across too many sectors and countries, resulting in poor outcomes.

Under the new vision, all aid programs would have clear end dates. They would also be closely measured for success against predetermined metrics.

According to Bloomberg, Musk is exploring blockchain technology for several government applications. These include improving tracking of federal expenditures, securing data, streamlining payments, and managing government properties.

The initiative could potentially create the largest government blockchain project in US history. The goals include promoting transparency and reducing costs across multiple government sectors.