The Trump administration is embarking on a significant overhaul of the U.S. Agency for International Development (USAID), with plans to integrate blockchain technology into its procurement system to enhance the security and transparency of foreign aid distributions. This initiative comes as part of a broader strategy to rebrand USAID as the U.S. International Humanitarian Assistance (IHA) under the authority of the Secretary of State.
This transformative proposal, reported by Wired, aims to not only rename the agency but also fundamentally change how it operates, particularly in how it distributes aid. The memo circulating among State Department staff suggests that all distributions will be secured and traced through blockchain technology, a move designed to increase transparency and ensure accountability in the spending of taxpayer dollars. However, specific details about the implementation, such as whether cryptocurrencies would be used or if a simpler digital ledger would suffice, remain unclear.
While the administration argues that this change could lead to more efficient and innovative aid distribution, critics have raised concerns about the feasibility and necessity of using blockchain technology in humanitarian contexts. Richard Crespin, a senior associate at the Center for Strategic and International Studies, commented on the depth of the proposal, stating, “The memo was very well thought out and well rationed. And it seems to me that whoever was the author has a pretty thorough understanding of both the legislative side of this as well as the practical side.”
Since President Trump’s inauguration, USAID has faced significant scrutiny, particularly from Elon Musk’s Department of Government Efficiency (DOGE), which advocates for government downsizing and efficiency improvements. Following a January 20 executive order from Trump, USAID's operations have been severely disrupted, with more than 80% of its grants terminated and staff placed on administrative leave.
The recent proposal comes with a backdrop of President Trump’s initiative to impose a 90-day freeze on all foreign aid, further complicating ongoing humanitarian relief efforts worldwide. The combination of halted payments and significant layoffs has thrown the future of USAID—and its role in global humanitarian efforts—into uncertainty.
The memo also notes that the current structure of U.S. foreign aid is perceived to be too broad and inefficient. The Trump administration aims to refocus its foreign assistance programs on areas aligned with U.S. geopolitical interests, eliminating nearly two dozen services previously offered by USAID. Programs related to democracy promotion and women’s empowerment are proposed for transfer to the State Department.
In an ironic twist, these proposals have faced legal challenges. Just this past week, a federal judge ruled that Musk and DOGE's attempts to close down USAID might be unconstitutional, placing additional scrutiny on the administration’s reform efforts. Judge Theodore D. Chuang issued a preliminary injunction preventing any further actions against USAID, emphasizing the need for adherence to constitutional guidelines in governmental reorganization.
As of March 21, 2025, the Trump administration is also expected to finalize $670 million in payments to foreign aid organizations for completed work, amidst ongoing litigation that accuses the administration of not complying with court orders to release these funds. More broadly, the total amount owed to aid organizations is reaching nearly $2 billion, highlighting the financial reckoning that lies ahead for the administration as it navigates both financial obligations and regulatory hurdles.
One of the agency’s pressing tasks amid this turmoil is the administration of approximately 1,000 ongoing life-sustaining humanitarian aid programs—an operational responsibility that the administration remains committed to fulfilling, even as proposals to restructure loom overhead. The new leaders of USAID have stated priorities aimed at ensuring that these programs remain functional, while also dealing with the transition prompted by the proposed integration into the State Department.
Given the turbulent backdrop, the proposed integration with blockchain aims to meet various hurdles faced by traditional aid distribution methods. Advocates argue that the new system could allow for flexibility in funding, increasing responsiveness that is often lacking in disaster response contexts. The memo suggests tying payments to achieved outcomes, rather than merely inputs, which could also encourage efficiency and accountability among implementing partners.
However, skepticism remains, especially from experts who claim that while blockchain offers innovative prospects, its practical application in humanitarian assistance has not yet proven superior to existing systems. Critics like Linda Raftree, a consultant specializing in tech for humanitarian aid, caution against seeing blockchain as a panacea for issues that may not exist, suggesting effective traditional solutions already in place.
In recent years, there have been limited successful instances of blockchain application within humanitarian contexts, such as UNHCR's pilot cash assistance program for Ukrainian refugees. These successes, however, often prompt questions about scalability and sustainability when adapted to broader operations like those of USAID.
As this reshaping of international assistance progresses, the Trump administration's approach illustrates a potential paradigm shift within U.S. foreign aid that prioritizes strict accountability, strategic interests, and the exploration of emerging technologies—walls that may foster both progress and contention as various stakeholders respond to the changes ahead.
