- Democratic lawmakers are urging HUD to halt any cryptocurrency and blockchain initiatives due to concerns about volatility and fraud risks.
- Representatives Waters, Lynch, and Cleaver warn that unregulated financial products could destabilize housing programs, drawing parallels to the 2008 financial crisis.
- HUD leadership denies plans for blockchain or cryptocurrency implementation despite internal discussions about potential pilot programs.
Three Democratic members of the House Financial Services Committee have formally called on the U.S. Department of Housing and Urban Development (HUD) to cease any cryptocurrency and blockchain initiatives. In a letter sent Wednesday to HUD Secretary Scott Turner, Representatives Maxine Waters, Stephen Lynch, and Emanuel Cleaver expressed serious concerns about introducing these volatile technologies into federal housing programs.
The lawmakers’ letter directly responds to reporting by ProPublica that revealed HUD officials had discussed incorporating blockchain technology and possibly stablecoins into agency operations. “The federal government cannot allow under-regulated financial products to infiltrate critical housing programs, especially when they have already proven to be dangerous, speculative, and harmful to working families,” the representatives wrote.
Internal Discussions Raise Alarms
ProPublica’s investigation uncovered February meetings where HUD officials discussed a potential pilot project involving cryptocurrency for one grant program, with possible expansion across the agency. A HUD finance official was recorded stating, “We are looking at this for the entire enterprise. We just wanted to start in CPD,” referring to HUD’s Office of Community Planning and Development, which administers billions in grants for affordable housing, homeless shelters, and disaster recovery.
Some HUD staffers expressed significant concerns internally, with one comparing the proposal to paying grant recipients in “Monopoly money.” Another staffer told ProPublica, “It’s just introducing another unregulated security into the housing market as though 2008, 2009 didn’t happen. I don’t see any way this will help anything. I see a lot of ways this could hurt.”
Agency Response and Blockchain Advocates
HUD spokesperson Kasey Lovett referenced Secretary Turner’s previous statement that “there’s no merit to it,” adding that “the department has no plans for blockchain or stablecoin. Education is not implementation.” However, ProPublica identified Irving Dennis, HUD’s principal deputy chief financial officer, as an internal advocate for the technology, noting he published a book in 2021 recommending HUD use blockchain.
The lawmakers’ letter requests comprehensive information about HUD’s consideration of crypto technologies, including risk assessments. This comes as the House Financial Services Committee considers a bill that would regulate stablecoins, a type of cryptocurrency typically pegged to the U.S. dollar but which has experienced significant fluctuations in the past.
The representatives specifically warned about repeating “the same mistakes of the past,” drawing parallels between unregulated cryptocurrency and the financial instruments that contributed to the 2008 housing crisis and subsequent economic collapse.
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