Summary
- Crypto is gaining a foothold in academia and not just through the courses that are increasingly being taught about the sector.
- Greater numbers of cases are emerging as higher education establishments become ever-more creative about accepting and using cryptocurrencies.
- This has taken what was once a niche funding opportunity into the mainstream, offering universities convenience, lowering costs, and offering the opportunity to expand portfolios.
- For similar stories, please visit our Crypto in Action page.
How are universities using crypto?
Historically, universities have had little involvement with cryptocurrencies. Sporadically, benefactors and alumni have provided gifts of cryptocurrency, but this is largely where the involvement has ended. Since 2021, however, the landscape has been developing.
Increasingly, universities are allowing students to pay their tuition fees using crypto. In 2021, Wharton School of the University of Pennsylvania became the first business school to accept cryptocurrency, fittingly allowing students taking its blockchain and digital assets program the option to pay in cryptocurrency.
This started a trend and now increasing numbers of universities are offering this option for a range of courses. Not only does the use of cryptocurrencies speed up the payment process but it’s useful for international students because it avoids currency conversion and international transfer costs.
A second interesting use case has been the rise in crypto-related products, such as NFTs. These are typically offered to alumni or a specific academic group to mark an occasion or offer some link with the institution.
There have also been some innovative avenues pursued; both the University of Pennsylvania and University of California, Berkeley, have auctioned NFTs (of images from patents it holds and Nobel-prize winning research, respectively) to fund further research. Meanwhile, some universities – including Brigham Young University and Syracuse University – are creating NFTs that offer real-world perks such as VIP seating at their events. Others still use NFTs to strengthen connections with their alumni. Harvard has offered commemorative NFTs, while Duke provides completion certificates as NFTs for its blockchain courses.
The third means by which crypto is developing in academia is through philanthropy. The first recorded incidence of a crypto donation to a university was in 2014 when co-founder of Blockchain.com, Nicholas Cary gifted 14.5 bitcoins to his former college, the University of Puget Sound. In the intervening years, donations in cryptocurrency have grown exponentially and are dealt with by both the university itself (often via the ‘How to Give’ pages of their websites) as well as outsourced to charities who effectively act as an intermediary between the donor and the higher education establishment.
In just one year, between 2020 and 2021, charitable organization, Fidelity Charitable, saw a year on year rise in digital gifts of 12 times that previously received, equating to $331 million.
Why the interest in crypto?
The pandemic transformed attitudes as traditional fundraising routes were cut off. Universities had to become ever-more creative about finding means to fund their work and activities. Alongside this, crypto has become more ubiquitous. Payment methods have developed quickly, and Millennials and Generation Z – current and recent graduates – show a much higher interest in digital assets – and in the case of Millennials, donating – than previous generations.
For the gifter, donating in cryptocurrency is non-taxable. Individuals in the US avoid paying capital gains tax if they give cryptocurrency directly to a higher education institution rather than liquidating their virtual assets and then donating the cash. As non-profits, universities don’t have to pay capital gains tax either, so in this respect, it is a situation that benefits both parties.
How is crypto usage developing?
One particular area of development has been in how crypto donations are viewed. Historically, an institution would treat these much like they would stock, selling the donation as soon as it was made to ensure that the value given was the value received.
This is still the case for many institutions, although the Universidad Americana in Paraguay assesses price trends before making a conversion.
Another notable shift is possibly under way, with universities potentially beginning to view crypto as part of their longer-term assets and investment strategy. It can’t have gone unnoticed that Cary’s gift of 14.5 bitcoin 2014 (worth $10,000 at the time) would now be worth more than $68,000.
Reflecting this, Emory University announced in October 2024 that it was putting $15.8 million from its endowment into a bitcoin ETF. This marked the first college endowment to publicly disclose this type of investment, although a number of universities are known to invest in cryptocurrencies.
Outlook
Increasing numbers of universities are developing the infrastructure or partnerships that will facilitate crypto donations. At this stage, these remain low when compared with all other fundraising methods (Pennsylvania estimates that bitcoin gifts represent 1% of its fundraising), but they are becoming an increasing feature of payments and donations in academic life.
