Welcome to USD1grant.com

What this page covers

This page explains how grants paid in USD1 stablecoins work in practice. It is written for two audiences:

• Funders (foundations, nonprofits, companies, research institutes, decentralized collectives) that want to issue grants using USD1 stablecoins.
• Recipients (individuals, labs, universities, nonprofits, social enterprises) that want to receive, hold, or convert grant funds denominated in USD1 stablecoins.

The emphasis is neutral, educational, and hype‑free. Where laws or standards matter, we reference recognized sources such as global standard setters, regulators, and major accounting bodies. Citations appear as numbered footnotes like this: ^[1].

Important: Nothing here is legal, tax, accounting, or investment advice. Stablecoin policy, accounting treatment, and on‑ramp or off‑ramp availability vary by country and by institution. Always consult qualified counsel and a licensed accountant in your jurisdiction.

Plain‑English definitions

• USD1 stablecoins: digital tokens designed to be redeemable one to one for U.S. dollars, typically backed by cash or short‑term dollar assets and transferable on public blockchains. While designed to hold stable value, they can face operational, regulatory, or market risks that may affect redemption or market pricing. Supervisors and standard setters treat them as a distinct class with payment and financial stability implications. ^{[1][2][12][13]}

• Grant: a non‑repayable transfer of value for a public purpose (for example research, education, humanitarian aid, or open‑source software) subject to eligibility rules and reporting. Grants differ from prizes (awards for past work) and bounties (task‑based payments) and from loans (repayable debt).

• On‑chain: activity recorded on a public blockchain ledger that anyone can independently verify.

• Custodial wallet: a hosted account where a service provider holds private keys on your behalf, similar to an online account at a financial institution.

• Self‑custody wallet: software or hardware where you control the private keys (the cryptographic passphrases that authorize transfers).

• KYC (know your customer) and AML (anti‑money‑laundering): legal and procedural controls to verify identities, assess risk, and report suspicious activity. For virtual assets, global standards are set by the Financial Action Task Force. ^[4][5]

• Sanctions screening: checking persons, entities, and wallet addresses against lists maintained by authorities such as the U.S. Treasury’s Office of Foreign Assets Control. ^[6]

• Travel rule: a requirement to transmit originator and beneficiary information when certain transfers occur between regulated institutions. The FATF updated the standard in 2025. ^[5]

• Fair value: an accounting measure under U.S. GAAP that reports an asset at its current market price, with gains and losses recognized in earnings. Crypto asset guidance changed in 2023 for many tokens. Stablecoin classification for holders can depend on facts and circumstances. ^[8][10][11]

Why grants in USD1 stablecoins

Using USD1 stablecoins for grants can reduce friction in certain cases while introducing new responsibilities.

Potential advantages

1. Global reach and speed: Transfers settle within minutes across borders, including nights and weekends, without waiting for correspondent banking windows. Humanitarian pilots have demonstrated how digital cash assistance can reach people who lack reliable local banking access. ^[17][18]

2. Programmatic disbursement: On‑chain tools can support milestone‑based releases, scheduled “streaming” of funds, or simple escrow, improving transparency compared with ad hoc wire batches.

3. Lower operational overhead in some corridors: Where recipients face high banking fees or delays, USD1 stablecoins may simplify distribution. Traditional remittances still cost about six percent on average worldwide, so digital rails can offer a useful benchmark when evaluating options. ^[14][15][16]

4. Denomination in U.S. dollars: For recipients who budget in dollars, denominating in USD1 stablecoins reduces local currency volatility compared with grants paid in purely volatile crypto assets. Supervisors nevertheless caution that stablecoins can fail to meet the tests of money and may introduce risks if they grow large without safeguards. ^[12][13]

Trade‑offs and responsibilities

1. Compliance: Funders and their service providers must manage AML, sanctions, and travel rule obligations where they apply. ^[4][5][6][7]

2. Issuer and reserve risk: Redeemability depends on the issuer’s governance, reserves, and operations. Authorities warn about run and asset‑backing risks and call for robust prudential regimes. ^{[1][2][12][13]}

3. Off‑ramp availability: Recipients often still need local currency for expenses. Availability, limits, and fees at regulated off‑ramps differ by country and can change.

4. Accounting and tax: Receipt of digital assets is usually taxable income in the United States, and holders need policies for measurement, recognition, and disclosures. ^{[8][9][10][11]}

5. Operational security: Self‑custody requires strong key hygiene. Custodial accounts reduce key risk but introduce counterparty risk and KYC obligations.

Common grant scenarios

1. Research mini‑grants to individuals worldwide. A research lab or foundation funds students and independent scholars for small projects. Recipients opt for custodial or self‑custody wallets and convert to local currency as needed. The funder applies sanctions screening, collects required identity information from recipients, and documents purpose and outcomes.

2. Open‑source software development grants. A program funds core maintainers, auditors, or documentation writers. Milestone‑based disbursements are used to ensure deliverables. Public repositories and issue trackers supply transparent progress logs.

3. Humanitarian cash assistance. A nonprofit partners with regulated intermediaries to deliver needs‑based stipends in restricted areas. Recipients redeem at participating agents or withdraw to bank accounts where available. Programs of this type have been piloted by international agencies using stablecoins on permissionless chains, with careful KYC, vendor partnerships, and fiat redemption options. ^[17][18]

4. Academic or cultural exchange grants. Universities or cultural institutions pay travel and research expenses to individuals with limited access to U.S. banking. Compliance, reporting, and campus policies need to be aligned before payouts.

5. Community microgrants to local nonprofits. A funder distributes USD1 stablecoins to several small organizations in different countries. Some grantees convert immediately to local currency; others hold temporarily in USD terms to match dollar‑denominated expenses. The funder uses expenditure responsibility when required under U.S. tax rules. ^{[19][20][21][22]}

Designing a grant program (for funders)

Clarify purpose, scope, and eligibility

• Program objective: Define public benefit outcomes and align with your charter or mission. Document what costs are eligible and what evidence you will accept for completion.
• Eligibility: Decide which profiles are allowed (individuals, nonprofits, companies, student groups, unregistered community organizations) and which countries are in scope. Maintain a sanctions and restricted jurisdictions policy. ^[6]
• Award size and structure: Consider a base amount plus milestone tranches. For larger or riskier projects, use multiple smaller releases rather than one lump‑sum transfer.

Choose wallet and payout rails

• Custodial payout: A regulated provider manages wallets and KYC. This can simplify onboarding and recovery. The provider’s compliance program should align with FATF standards and the travel rule. ^[4][5]
• Self‑custody payout: Suitable for experienced recipients who can manage private keys securely. Provide guidance on seed phrase storage, device hygiene, and phishing risks.
• Network choice: Evaluate transaction fees, congestion, finality, and the breadth of regulated off‑ramps in your target countries. Favor mature networks with robust tooling, monitoring, and incident response ecosystems.

Design the disbursement flow

• Up‑front payment for truly small grants (for example under a few hundred dollars), with post‑hoc reporting.
• Milestone‑based release for larger grants, with clear acceptance criteria.
• Scheduled or “streaming” payments for predictable monthly support, with pause or clawback options defined in the agreement.

Documentation and reporting

• Grant agreement: Plain‑English description of the project, deliverables, payment schedule, permitted uses, reporting cadence, and dispute or clawback terms.
• Identity and screening: Collect recipient identity information appropriate to your risk profile and the laws that apply to you and your service providers. Retain evidence of checks performed. ^[4][6]
• Use of funds: Require simple budget categories and receipts. For in‑kind deliverables, require links or artifacts that anyone can verify.

Treasury and market operations

• Funding the program: If your operating account is in dollars, convert only the amount needed for upcoming grant cycles into USD1 stablecoins to reduce exposure to issuer or operational risks.
• On‑chain monitoring: Track disbursements and recipient confirmations with block explorers. Log transaction IDs and timestamps in your grant files.
• Off‑ramp planning: Map regulated off‑ramp options before you launch. Encourage recipients to test a small transfer through their preferred off‑ramp ahead of time.

Governance, transparency, and conflicts of interest

• Selection process: Publicly state criteria and decision timelines. If you use reviewers, publish eligibility checks and conflict‑of‑interest statements in summary form.
• Appeals or feedback: Offer a simple channel for applicants to ask questions or to appeal a rejection. Publish acceptance rates and anonymized summaries of funded projects.

Compliance essentials: AML, sanctions, travel rule, privacy

AML and KYC

Most funders will interact with regulated intermediaries at some point. The FATF sets global AML standards for virtual assets and service providers; jurisdictions implement them through local law and supervision. Programs should understand the FATF’s risk‑based approach and updated guidance for virtual assets and service providers. ^[4]

Key elements that typically matter:

• Customer due diligence: Know who you are paying and why. Keep records proportionate to risk.
• Screening and monitoring: Screen applicants and counterparties. Log and resolve potential alerts.
• Recordkeeping and reporting: When your providers file suspicious activity or equivalent reports, cooperate as required by law.

Sanctions

Even humanitarian or academic programs must avoid sanctioned persons or jurisdictions unless a license applies. The U.S. Treasury’s OFAC has issued specific guidance for the virtual currency industry, including expectations for screening, geoblocking where applicable, and internal controls. ^[6]

Practical steps:

• Use providers that screen wallet addresses and counterparties.
• Maintain written procedures for handling positive matches.
• Consider jurisdiction exclusions and alternative payout methods where sanctions risk is elevated.

The travel rule

The travel rule requires certain originator and beneficiary information to accompany covered transfers between regulated entities. FATF members agreed to updates to Recommendation 16 in June 2025 to improve payment transparency and data consistency for both traditional and virtual asset transfers. ^[5] If you use a custodial service, it will typically handle travel rule messaging, but you may need to collect extra recipient details at onboarding.

U.S. guidance on virtual asset businesses

In the United States, FinCEN treats many virtual asset activities as money transmission when performed as a business, which triggers Bank Secrecy Act obligations for the provider. ^[7] Even if you are not a money transmitter, your vendors likely are; diligence their registration status and AML program.

Privacy and data protection

• European Union: Personal data collected during KYC and grants administration is subject to the General Data Protection Regulation. Map your roles as controller or processor, define legal bases, and adopt appropriate retention schedules and security controls. ^[23]
• United States: Many custodial providers are subject to the Gramm‑Leach‑Bliley Act Safeguards Rule, which requires a written information security program and controls proportionate to risk. ^[24][25] If you are not a financial institution, you still owe a duty of care: minimize data collection, restrict access, and encrypt wherever possible.

Cross‑border realities and remittances

Grants often flow from one country to another. In many corridors, traditional remittances cost between five and seven percent of the amount sent. The World Bank’s Remittance Prices Worldwide series estimated a global average cost near six and a half percent in early 2025, with digital services somewhat lower on average. ^[14][15][16] USD1 stablecoins give funders an additional option to benchmark costs and timelines against local rails. They are not automatically cheaper once you include onboarding, off‑ramping, and compliance overhead, but they can shorten settlement times and extend service hours.

Keep in mind:

• Local banking rules vary widely. Some countries restrict or license crypto‑asset activity.
• Recipient experience matters. If converting to local currency is slow or expensive in the recipient’s location, a dollar‑denominated grant may not help.
• Receipts and proofs: Encourage recipients to save off‑ramp confirmations and bank deposit statements to support audits.

Accounting and tax: what the rules say

Tax (United States)

The IRS treats digital assets as property for federal tax purposes. Income received as digital assets is generally taxable. The IRS reminds taxpayers to report digital asset income and provides instructions for reporting amounts not otherwise captured on wage or informational returns. ^[8][9] For grants to individuals, the payer may have separate reporting obligations depending on context. For organizations, grants may or may not be taxable depending on exempt status and use of funds.

Accounting (U.S. GAAP and selected international notes)

• U.S. GAAP: In December 2023, the FASB issued ASU 2023‑08 on crypto assets. For in‑scope crypto assets, the update requires measurement at fair value with changes recognized in earnings and enhanced disclosures. ^[10][12][26] Whether a particular USD1 stablecoins holding is in scope or should be classified differently depends on its legal and contractual features, redemption rights, and how your auditors interpret existing literature. Independent accounting analyses note that some fiat‑backed stablecoins might not fall under the “crypto intangible” model and therefore may require other classification and disclosure approaches. ^[11][27]

• IFRS: Under IFRS, the classification and measurement of digital assets depends on the nature and use of the asset. Industry guidance compares how IFRS and U.S. GAAP treat crypto assets after the FASB update and stresses the need for entity‑specific analysis. ^[11]

Work closely with your auditors. Policies should describe recognition, measurement, impairment or fair value methods, presentation, and disclosures. Maintain price source hierarchies and closing procedures for month‑end and year‑end.

Private foundations and international grants (United States)

If you are a U.S. private foundation making international grants, you may need to exercise expenditure responsibility or obtain equivalency determination depending on the recipient and grant type. Expenditure responsibility requires procedures to ensure funds are used only for the intended purposes and for reporting by both grantee and grantor. ^{[19][20][21][22]} Paying in USD1 stablecoins does not change these obligations; it simply changes the payment rail.

Receiving and managing a USD1 stablecoins grant (for recipients)

Before the first payment

• Select your wallet model:

  • Custodial if you want password resets, customer support, and bank‑style recovery.
  • Self‑custody if you can reliably store and protect your seed phrase and use hardware devices for sensitive transactions.

• Complete onboarding: Expect identity verification. Have a government ID and, in some countries, proof of address. Your funder or wallet provider may ask for additional details to satisfy travel rule obligations. ^[5]

• Test a small transfer: Before the full grant, ask for a tiny amount to confirm address and network settings.

• Plan your conversion path: Identify a reputable off‑ramp that supports your country and your bank or agent network. Confirm daily limits, fees, and timelines.

When the grant arrives

• Confirm receipt on‑chain: Save the transaction ID and timestamp.
• Record fair value: Note the dollar value at the time of receipt and the source you used for pricing. This is crucial for accounting and taxes. ^[8][10]
• Move funds with intent: If you will not spend on‑chain, consider converting the portion you immediately need to a bank account to reduce exposure to issuer or operational risks.

Ongoing management

• Track spending: Keep invoices, receipts, and summaries.
• Security basics: Enable multi‑factor authentication for custodial accounts. For self‑custody, use hardware wallets, never share seed phrases, and verify addresses on device screens.
• Reporting: Provide periodic updates and deliverables according to your grant agreement. For research or open‑source work, public repositories and logs are often the easiest way to demonstrate progress.

Common pitfalls to avoid

• Wrong network: Sending on one network to an address intended for another can result in loss. Always check chain, token, and address format.
• Phishing and imposters: Verify any request to change payout details using a second channel.
• Holding more than needed: If you only spend in local currency, consider converting rather than passively holding.

Risks and controls you should plan for

Policy and regulatory risk

Global and national authorities have issued strong warnings about stablecoin risks and have proposed or adopted frameworks to govern issuance, reserve assets, disclosures, and redemption. ^{[1][2][12][13]} In the European Union, the MiCA regulation establishes regimes for crypto assets, including e‑money tokens and asset‑referenced tokens. ^[3] In the United Kingdom, regulators have outlined their approach to stablecoin issuance and custody and have consulted on proposed rules. ^[28][29] Program policies should anticipate change.

Issuer and reserve risk

Even fully reserved models depend on asset custody, legal structure, and operations. Authorities highlight run risk, asset mismatch, and potential market stress channels. ^{[1][2][12][13][18]} Funders can reduce exposure by paying in smaller tranches, selecting widely used payout rails, and encouraging recipients to convert promptly if they do not need on‑chain funds.

Operational and smart contract risk

Transfers are final. Mistyped addresses, compromised keys, or malicious approvals can lead to unrecoverable loss. Avoid experimental smart contracts for essential disbursements. Favor simple transfers unless there is a clear security and audit story for more complex flows.

Financial crime and sanctions risk

Illicit finance typologies include romance‑scam laundering, ransomware, and sanctioned actors attempting to use virtual assets. Authorities expect risk‑based controls and documented screening. ^[6][12]

Market and liquidity risk at off‑ramps

Local banking conditions, seasonal demand, or policy changes can reduce off‑ramp capacity temporarily. If recipients cannot convert when needed, your program has not met its objectives. Maintain backup options.

Reputation and beneficiary protection

Public on‑chain activity can expose recipients to unwanted scrutiny. Do not publish recipient addresses unless they consent. When public reporting is required, aggregate and anonymize where possible.

Quick answers to frequent questions

Do USD1 stablecoins eliminate volatility risk?
They reduce crypto price volatility by targeting a one to one dollar value, but they introduce issuer, reserve, and policy risks. Supervisors have been explicit about those risks. ^{[1][2][12][13]}

Is a USD1 stablecoins grant always cheaper or faster than a wire?
Not always. End‑to‑end cost depends on onboarding, compliance, blockchain fees, and off‑ramp fees in the recipient’s country. Use the World Bank’s remittance statistics as a context benchmark and compare options. ^[14][15][16]

Can we pay anonymous recipients?
If you operate through regulated providers, expect KYC. Even when you do not, you may still face sanctions and reporting obligations. ^[4][6][7]

How should we account for grants we hold in USD1 stablecoins?
Under U.S. GAAP, crypto asset accounting changed with ASU 2023‑08, but classification for stablecoins depends on facts and circumstances. Many entities will measure at fair value with appropriate disclosures, while others may reach different conclusions based on redemption rights and legal form. Consult your auditor. ^{[10][11][12][27]}

Are grants paid in USD1 stablecoins taxable in the United States?
Digital asset income is generally taxable. See the IRS digital assets guidance and return instructions. ^[8][9]

What about the European Union?
MiCA establishes regimes for crypto assets, including requirements for issuers and custodians. If your program touches the EU, check whether your providers hold required authorizations and how e‑money token rules apply. ^[3]

What about the United Kingdom?
The FCA and Bank of England have set out a roadmap that includes stablecoin issuance and custody proposals. Monitor consultations and final rules if your program reaches UK users. ^[28][29]

We are a U.S. private foundation making overseas grants. Does paying in USD1 stablecoins change “expenditure responsibility”?
No. The payment rail does not change the requirement to ensure funds are used for charitable purposes, to obtain reports from grantees, and to report to the IRS. ^{[19][20][21][22]}

Sources

1. Financial Stability Board, High‑level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin Arrangements (Jul. 2023). https://www.fsb.org/2023/07/high-level-recommendations-for-the-regulation-supervision-and-oversight-of-global-stablecoin-arrangements-final-report/ ^[1]

2. IMF and Financial Stability Board, IMF‑FSB Synthesis Paper: Policies for Crypto‑Assets (Sep. 2023). https://www.fsb.org/2023/09/imf-fsb-synthesis-paper-policies-for-crypto-assets/ ^[2]

3. European Union, Regulation (EU) 2023/1114 on Markets in Crypto‑Assets (MiCA), EUR‑Lex. https://eur-lex.europa.eu/eli/reg/2023/1114/oj/eng ^[3]

4. Financial Action Task Force, Updated Guidance for a Risk‑Based Approach to Virtual Assets and VASPs (Oct. 2021). https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Guidance-rba-virtual-assets-2021.html ^[4]

5. Financial Action Task Force, Updates to Recommendation 16 on Payment Transparency (June 2025). https://www.fatf-gafi.org/en/publications/Fatfrecommendations/update-Recommendation-16-payment-transparency-june-2025.html ^[5]

6. U.S. Treasury, Office of Foreign Assets Control, Sanctions Compliance Guidance for the Virtual Currency Industry (Oct. 2021). https://ofac.treasury.gov/recent-actions/20211015 ^[6]

7. Financial Crimes Enforcement Network, Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies (May 2019). https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf ^[7]

8. Internal Revenue Service, Digital assets overview. https://www.irs.gov/filing/digital-assets ^[8]

9. Internal Revenue Service, Taxpayers need to report crypto and other digital asset transactions (Apr. 2024). https://www.irs.gov/newsroom/taxpayers-need-to-report-crypto-other-digital-asset-transactions-on-their-tax-return and Instructions for Form 1040 (line 8v). https://www.irs.gov/instructions/i1040gi ^[9]

10. Financial Accounting Standards Board, ASU 2023‑08 — Accounting for and Disclosure of Crypto Assets. https://www.fasb.org/page/Document?pdf=ASU+2023-08.pdf ^[10]

11. KPMG, Digital assets under IFRS Accounting Standards vs U.S. GAAP (2024). https://kpmg.com/us/en/articles/2024/digital-assets-under-ifrs-accounting-standards.html ^[11]

12. Bank for International Settlements, Annual Economic Report 2025, Chapter on the next‑generation monetary and financial system (Jun. 2025). https://www.bis.org/publ/arpdf/ar2025e3.htm ^[12]

13. Financial Stability Oversight Council, 2023 Annual Report (Dec. 2023). https://home.treasury.gov/system/files/261/FSOC2023AnnualReport.pdf ^[13]

14. World Bank, Remittance Prices Worldwide (site, accessed 2025). https://remittanceprices.worldbank.org/ ^[14]

15. World Bank, Remittance Prices Worldwide — March 2025 report. https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_annex_q125_1_0.pdf ^[15]

16. FSB, Annual progress report on cross‑border payments targets (Oct. 2024). https://www.fsb.org/uploads/P211024-3.pdf ^[16]

17. UNHCR, Pilot cash‑based intervention using blockchain technology for humanitarian payments in Ukraine (Dec. 2022). https://www.unhcr.org/ua/en/news/unhcr-launches-pilot-cash-based-intervention-using-blockchain-technology-humanitarian-payments ^[17]

18. ReliefWeb, International Rescue Committee: Stellar blockchain technology powers cash‑based assistance in Ukraine (Dec. 2022). https://reliefweb.int/report/ukraine/stellar-blockchain-technology-powers-international-rescue-committees-cash-based-humanitarian-assistance-conflict-affected-people-ukraine ^[18]

19. IRS, Grants by private foundations: Expenditure responsibility (Jan. 2025). https://www.irs.gov/charities-non-profits/private-foundations/grants-by-private-foundations-expenditure-responsibility ^[19]

20. IRS, Grants to foreign organizations by private foundations (Feb. 2025). https://www.irs.gov/charities-non-profits/grants-to-foreign-organizations-by-private-foundations ^[20]

21. 26 C.F.R. §53.4945‑5 — Grants to organizations. https://www.law.cornell.edu/cfr/text/26/53.4945-5 ^[21]

22. IRS, Chief Counsel Advice / Private letter rulings referencing expenditure responsibility (2025). https://www.irs.gov/pub/irs-wd/202531009.pdf ^[22]

23. European Union, General Data Protection Regulation (GDPR) legal text. https://eur-lex.europa.eu/eli/reg/2016/679/oj/eng ^[23]

24. U.S. Federal Trade Commission, Safeguards Rule. https://www.ftc.gov/legal-library/browse/rules/safeguards-rule ^[24]

25. U.S. Federal Trade Commission, Updated Safeguards Rule guidance (Jun. 2025). https://www.ftc.gov/news-events/news/press-releases/2025/06/ftc-provides-guidance-updated-safeguards-rule ^[25]

26. FASB, Project page for ASU 2023‑08. https://www.fasb.org/page/PageContent?pageId=%2Fprojects%2Frecentlycompleted%2Faccounting-for-and-disclosure-of-crypto-assets.html ^[26]

27. KPMG, Issues‑in‑depth: Crypto intangible assets and notes on stablecoins (2024, PDF). https://kpmg.com/kpmg-us/content/dam/kpmg/frv/pdf/2024/issues-in-depth-crypto-intangible-asset-non-ic.pdf ^[27]

28. UK Financial Conduct Authority, Consultation: Stablecoin issuance and cryptoasset custody (May 2025). https://www.fca.org.uk/publications/consultation-papers/cp25-14-stablecoin-issuance-cryptoasset-custody ^[28]

29. Bank of England, Regulatory regime for systemic payment systems using stablecoins (Discussion Paper, Nov. 2023). https://www.bankofengland.co.uk/paper/2023/dp/regulatory-regime-for-systemic-payment-systems-using-stablecoins-and-related-service-providers ^[29]