Vitalik Buterin, co-founder of the Ethereum Blockchain, is donating $100 million to fund Covid-19 research projects in India. However, the funds won’t be given as physical cash but in the form of USD Coin (USDC) cryptocurrency.
“Pandemics beyond Covid continue to be a large risk in the 21st century,” the Russian-American programmer tweeted. “We look forward to continuing our efforts to better live with airborne viruses and eventually live without them.”
Earmarked for improvements in indoor air quality and research into the effects of Long Covid, $10 million in USDC will be provided by Buterin himself, while $90 million worth of the cryptocurrency will be given by Crypto Relief, a Covid-19 relief fund created by Sandeep Nailwal, the founder of the Polygon blockchain. The fund previously allocated $100 million in 2022 to Covid-19 initiatives selected by Buterin.
While this year’s donation from Crypto Relief will be given as USDC, it comes from a transfer of the meme-cryptocurrency Shiba Inu (SHIB) given to the fund by Buterin. In May 2021, he donated more than $1.2 billion worth of the tokens to Crypto Relief, in addition to making million-dollar gifts of cryptocurrency to organizations like Gitcoin, GiveWell, Methuselah Foundation and Machine Intelligence Research.
Nailwal later returned $100 million worth of the SHIB coins to Buterin, citing issues surrounding India’s legislation for relief fund distribution. In response, Buterin formed his own fund, Balvi, to distribute the money. In November of 2022, Balvi gave $9.4 million in cryptocurrency to the University of Maryland to fund studies on air disinfection, followed by a $15 million donation in March to the University of California San Diego to establish the Meta-Institute for Airborne Disease in a Changing Climate.
What are the pros and cons of crypto donations?
A growing number of public institutions and non-profits have begun to accept cryptocurrency donations in recent years. Fidelity Charitable, a public charity and the largest grantmaker in the U.S., has received more than $500 million in cryptocurrency since it began accepting it in 2015, according to its most recent annual report.
Giving cryptocurrency as a donation instead of first converting the digital currency into cash allows donors to bypass the capital gains tax, meaning charities may receive larger donations in crypto than they would in cash. Some nonprofits, like the American Red Cross and Save the Children, have established programs to immediately convert crypto gifts into liquid funds.
For Buterin’s donation to the University of Maryland, the school partnered with the Giving Block, which aids donees accepting cryptocurrency and helps donors find charities willing to accept the gifts. The University of California San Diego exchanged its donation into U.S. dollars through Engiven, which provides crypto donation services to nonprofits.
But figuring out how to accept cryptocurrency or when to convert the currency into cash can be confusing for nonprofits. And the unstable nature of the crypto market provides an additional layer of risk for institutions that can’t be certain of a gift’s reliability. Numerous donations promised to nonprofits by the now-bankrupt crypto fund FTX and its founder Sam Bankman-Fried, for example, were withdrawn after FTX collapsed in November.
The tenuous nature of cryptocurrency gifts was also evident in Buterin’s more than $1 billion gift to Crypto Relief in SHIB, which subsequently spooked holders of the coin and led to a 36 percent decrease in its value, according to Forbes.
Other nonprofits have expressed concerns about these types of donations, such as the energy-intensive nature of cryptocurrency mining. In 2021, Greenpeace announced it would no longer accept Bitcoin because of its environmental impact, while the Mozilla Foundation cited similar reasons for its decision to restrict certain types of cryptocurrency donations.
Meanwhile, the Wikipedia Foundation, which has accepted cryptocurrency since 2014, revealed in May of 2022 that it would stop accepting the donations following a three-month discussion of concerns related to the currency’s energy use and the foundation’s potential promotion of a risky industry.