Circle Foundation has awarded grants to the United Nations Development Programme and World Food Programme to test digital payments for development and humanitarian aid. The projects will examine regulated payment stablecoins, costs, speed, and access.
According to the announcement on September 25, grants support projects at different stages. UNDP will extend to new modes of payment that were trialed in some of its previous programs, and WFP will create necessary systems ahead of stablecoin trials.
UNDP tested digital payments in multiple countries. WFP will prioritize governance, treasury, reconciliation, compliance, and local financial partnerships.
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How Will Circle Foundation Support UN Digital Payments?
Circle Foundation has announced a partnership with UNDP to develop a Digital Asset Innovation Pool, which will assist in evaluating regulatory payment stablecoins appropriate for use within specific development initiatives.
The project will offer assistance in navigating local legal requirements and operational parameters applicable to the beneficiaries, along with measuring delivery timeframes, expenses, and coverage areas.
According to UNDP, the solution could present a viable alternative where legacy financial frameworks pose logistical challenges, prohibitive expenses, or restrictions in accessibility. The organization confirmed that banking methods would continue being used concurrently.
Meanwhile, the WFP will direct its grant award to another phase of activity altogether. Financial support through the World Food Program USA would facilitate prerequisite infrastructure ahead of stablecoin tests.
UNDP country offices will utilize the Digital Asset Innovation Pool as a way of evaluating payment options. The framework will assist them in determining where digital payments can play a role in the development programs.
Those decisions are based on the results of previous projects. UNDP piloted cash-for-work with digital payments in Aleppo, Syria, and conducted a Haiti cash transfer pilot during times of low connectivity.
In Guatemala, a remittance-community investment project was introduced. A pilot project in The Gambia linked mobile wallets to the existing cash-agent networks.
After 16 months of payment tests, UNDP reached out to add more partners to their relationship on the platform known as Stellar. Its Syria pilot has helped the agency cut down on distribution costs from 10% to 2%, the agency said.
It added that the Haiti project kept on processing payments throughout a cellular outage. The new pool will help country offices apply lessons from those trials.
Robert Pasicko, team lead at UNDP’s Alternative Finance Lab, said the pool will support faster, more affordable, and easier-to-access payments. The lab earlier spearheaded the Sustainable Development Goals Blockchain Accelerator of UNDP.
Where Will WFP Test Stablecoin Payments?
WFP intends to pilot two to three country corridors over a three-year period. No country names have been disclosed in the September 25 press release.
According to the Circle Foundation, WFP and its Innovation Accelerator plan to create governance and risk policies initially. They plan to establish treasury, reconciliation, and compliance mechanisms applicable in several country operations.
Reconciliation involves matching payments made through the payment system against internal ledgers and actual receipt amounts received locally. WFP aims to interface its proposed mechanism with fintechs and mobile money platforms.
These interfaces would enable WFP to deliver payments via services that exist in each market environment. WFP will evaluate the effectiveness, integrity, and resilience of its payments infrastructure through these pilots.
When Will the WFP Trials Take Place?
The project implementation timeline spans three years. In this period, the organization intends to construct infrastructure, engage local providers, and conduct tests on payments along the designated corridors.
This grant will also support independent research on the cost and velocity of payments. This research will investigate whether payments using regulated stablecoins are feasible within humanitarian operations.
According to Bernhard Kowatsch, Director at WFP Global Accelerator and Ventures, the grant money will enable WFP to conduct live tests of regulated stablecoin payments in real-world contexts. These activities will help develop evidence, partnerships, and operational capabilities.
Neither the launch date of the first corridor nor the monetary amount of either grant is specified in the announcement.
Why Is Circle Foundation Expanding UN Payment Work?
The Foundation has made its second grant to a UN initiative. Its first international grant, announced in January, went towards the Digital Hub for Treasury Solutions, introduced in 2021 by the UNHCR.
It is an interoperable platform intended to streamline finance functions at UN agencies. According to Circle, fifteen entities participate in this effort, among them UNDP and WFP.
January’s grants addressed cross-border payments, local currency conversion, and inter-financial system connections. This month’s round expands this scope into development disbursements and humanitarian delivery.
On September 22, the Foundation announced its inaugural US grants. Two recipients were the Accion Opportunity Fund and Pacific Community Ventures. They have received financing for their financial technologies targeting small businesses.
What Supports Circle Foundation’s Grant Program?
Circle Internet Group provides the Foundation with an equity commitment of 1% of its capital stock in the form of up to 2,682,392 Class A shares over ten years.
Circle Foundation serves as a donor-advised fund administered by Fidelity Charitable. As announced on September 25th, the Circle Foundation awarded a grant to the World Food Programme USA in relation to the WFP initiative.
The two pilot programs will proceed by focusing on data collection related to real-world payment applications. While UNDP scales up on previous methodologies, WFP develops the necessary controls prior to any stablecoin trials moving forward.
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