Huobi Charity, the philanthropic arm of one of China’s most popular cryptocurrency exchanges, pledged $1 million worth of Bitcoin and fiat currency to UNICEF’s CryptoFund, the agency’s crypto venture arm.
Why it matters: This is the first institutional Bitcoin pledge to the agency. The news could attract more donations to UNICEF’s crypto fund, which is not widely known.
- Huobi’s major competitors Binance and Coinbase started charity funds in 2018, more than two years before Huobi registered its own charity. The pledge could put Huobi on the map of charitable crypto companies.
Details: Huobi Charity has already donated BTC 7 ($350,000 at the time of the donation) to the fund, the company said in a press release sent to TechNode.
- The funds will be distributed to early-stage companies without being converted to fiat.
- Prior to Huobi Charity’s pledge, the agency has raised ETH 2,267 ($4.78 million) and BTC 1 ($58,500) a UNICEF spokesperson told TechNode.
- Davin pointed out that the two-year-old Cryptofund is often met with disbelief. Potential partners often ask “Really, you guys really do that?” Thomas Davin, director of UNICEF’s office of innovation, told TechNode.
- The regulatory framework around crypto, such as the lack of tax rebates, is a lot less “incentivizing” for companies to donate to charity, compared to the framework around fiat currencies.
- But the digital ledger powering Bitcoin and Ethereum can enhance transparency and accountability of beneficiaries: “We know exactly how the money is used,” Davin said.
- “Hopefully after Huobi, we will find more partners,” Davin said.
Context: UNICEF’s older Innovation Fund works like a tech venture capital fund in that it invests in early-stage ventures with potential to support the agency’s goals as well as being commercially viable, Davin said.
- The Innovation Fund was started in 2008, and the CryptoFund in 2019. Donations to the digital currency fund were mainly from private individuals and companies, Davin said.
- Davin said it was not easy to start the fund due to cryptocurrencies’ notorious volatility: “The UN is a huge bureaucracy. Bringing very volatile assets into our organization was a difficult conversation” with finance teams, he said.
- To manage this risk, the fund carries through its investments in crypto, which enables UNICEF to look at crypto “as an asset and not as a financial instrument,” Davin said.
- The CryptoFund has so far invested in 12 blockchain-powered solutions from around the world. “We believe there’s so many things we could do with crypto,” Davin said.
- Binance also runs a charity foundation, which has raised BTC 1,879 from 1,045 donators. It has distributed the funds to 106,643 beneficiaries, according to its website.
- Huobi registered a charity arm in the UK in January.
Updated: This article has been updated to clarify that the pledge came from Huobi Charity.