When Christina Lomazzo was a teenager, she used to hop back and forth across the U.S. Canada border for fun. A native of Ontario, with a father born in Italy, Lomazzo grew up speaking French, English, and Italian, and when things were slow in her home town she and her friends would pile into a black SUV, cross the Detroit River to the United States and watch all-star Rasheed Wallace and the Detroit Pistons. Instead of buying each other presents when she was a kid, Lomazzo’s family took trips around the world.
Now the 28-year-old former project coordinator for the Bank of Canada and co-founder of Deloitte’s government blockchain practice is leveraging her international background at the United Nations, where in September 2018 she was hired as the United Nations Children’s Fund’s first head of blockchain, the technology behind bitcoin, that simplifies transactions across borders. After 14 months’ work at the imposing United Nations Plaza in New York, Lomazzo and her international team, today announced the UNICEF Crypto Fund, a prototype that lets the agency accept bitcoin and ether donations and invest them directly into blockchain startups
In addition to investing cryptocurrency into early stage, open-source companies working with children, the fund represents the first time any UN agency, much less one that generated $6.7 billion revenue last year, will be able to accept bitcoin and ethereum donations. The prototype launched today with a donation of 1 bitcoin and 10,000 ether from the Switzerland-based Ethereum Foundation has already signed agreements with agencies from four nations, UNICEF USA, UNICEF France, UNICEF Australia, and UNICEF New Zealand to start accepting cryptocurrency donations immediately.
As the United Nations, which last year received $15 billion in donations, kicks off a new phase of development where it sees itself as much a financial innovator as a dispenser of aid, the ability to accept cryptocurrency donations and track exactly how they were spent could pave the way for a new, more transparent agency, leading to more donations than ever before.
“We don’t see the Crypto Fund so much as being crypto,” says Lomazzo, speaking from the UNICEF office of innovation in New York. “What we really see it as is being ready for a digital future. We’re going to need to be ready to deal with digital assets whether that be bitcoin, or ether, or some other government-backed digital currency. It could be any of those, but this is really helping us build up the muscles to understand how to live or how to on-board digital assets.”
Lomazzo was born in April 1991 in Windsor, Ontario, just a short drive from where she grew up in the town of Amherstburg, and an even shorter drive to the Piston’s former home stadium. The child of a computer engineer father and a worker advocate mother, Lomazzo was raised by her Italian grandmother who never learned English.
With a global sense of culture deep in her DNA, Lomazzo enrolled at the University of Ottowa in 2009 where she studied in Italy and Australia before earning a bachelor’s degree in international business. Shortly after graduating she was first exposed to bitcoin while working as a project coordinator at Canada’s central bank. By 2016, when she earned two master’s degrees from Canada’s Global Alliance in Management Education and Western University in international management and international business respectively, she had caught the bitcoin bug, going onto write one of the first masters’ theses on cryptocurrency, “How Banks Respond to Disruptive Innovation: Blockchain as a Case Study,” a comparison of how ten giant banks were exploring blockchain.
Before Lomazzo even graduated, in December 2015, at around the same time UNICEF was starting to explore blockchain, she was hired by Deloitte, in Canada’s capital, Ottawa, across the street from the Parliament building. At the time, the office’s blockchain work was still a part of the emerging tech division, but she and innovation lead Kevin Armstrong spun-off blockchain into its own focus, specializing in helping local, provincial and state agencies use the technology around the world.
In February 2016, at around the same time her future colleagues at the United Nations finished their first blockchain prototype, Lomazzo entered a “super seedy,” now-closed, bar in Toronto called the Clocktower Brew Pub and began the process of documenting how bitcoin was evolving. She photographed a bitcoin ATM “behind a black curtain so you felt like you were doing something wrong,”she says, and took what ended up being the first of four photos of the ATM, showing a price of $551 CAD, compared to $10,920 today, a 1,181% increase.
“The cool part is that bitcoin ATM has moved since then and so I track it,” she says. “That exact one has moved to a convenience store closer to where I lived. And I walked in. And it was, like, “Where’s your Bitcoin ATM?” It was in the middle, super bright, super visible. There was a line behind me.”
As bitcoin struggled to change its reputation as a currency for criminals to something businesses might use, Lomazzo stumbled across the job post for the lead blockchain position at UNICEF “two hours before it closed.” Following the prodding of her younger sister, Lomazzo threw her name in the ring, and within a month and a half of doing so moved to New York.
The birth of the Crypto Fund actual precedes Lomazzo, going all the back to 2007 when UNICEF launched its office of innovation, led by Chris Fabian, 39. The office, which prototypes a wide range of experimental technology, quickly established a reputation for identifying projects that could be integrated into the larger organization. One of the office’s first projects, on data science, evolved into UNICEF’s current information technology and data division.
Then, in the winter of 2010, long before most people had even heard about bitcoin, the United Nations General Assembly adopted resolution 65/146, titled, “Innovative mechanisms for financing of development.” Dubbed “innovative finance” for short, the resolution requested that agencies identify new, steady sources of financing to supplement existing donations.
In spite of some less than successful work at the office of innovation involving virtual reality, Fabian and London School of Economics grad Sunita Grote took a queue from the resolution and launched the UNICEF Venture Fund in February 2016 as a way to fund startups working with open source technology in developing nations. By November of that year the fund, managed by Grote, announced its first cohort of investments, including UNICEF’s first blockchain investment, South Africa-based 9Needs, using blockchain to help school children prove their identity. By August 2017, the same time Lomazzo was promoted to senior consultant at Deloitte, the office of innovation had its first internal discussion about the Crypto Fund with UNICEF’s Department of Finance and Asset Management. Over the course of the next year, the team formulated an official product description and created an accounting structure for holding cryptocurrencies in cooperation with the United Nations Office for Project Services (UNOPS). Nevertheless, they were still without a dedicated leader, with Fabian and Grote helping run a number of other efforts.
The following September, as the first round of feedback from senior leadership on the Crypto Fund was being processed, Lomazzo was finally brought on board full-time to not only build out the blockchain team and manage the entirety of UNICEF’s blockchain work but help bring the Crypto Fund over the finish line. “Blockchain is a complicated, theoretical thing,”says Fabian. “And cryptocurrency’s a complicated application of it. Christina has the ability to make that really understandable because she’s done it with bankers and governments before”
In parallel with UNICEF’s blockchain work, UN secretary-general António Guterres’ published a lengthy strategic plan for how the United Nations could increasingly use a wide range of technology to take a new kind of leadership role in solving the world’s problems. He formed a high-level panel co-chaired by Melinda Gates and Jack Ma to explore how cooperative efforts could reduce redundancies and expand the United Nation’s impact. After almost a year of work, in June 2019, the panel issued its “declaration of digital interdependence” with five recommendations for building an infrastructure capable of solving global problems across borders, giving fuel and further guidance to UNICEF’s Crypto Fund and its other blockchain projects.
Perhaps most importantly, the 47-page report called for the creation of an inclusive digital economy and society. The World Bank estimates that as of 2018 1.7 billion people were excluded from the global banking economy. Using terms very familiar to blockchain developers, the report called for the creation of affordable access to “digital networks” and financial services for every adult on earth by 2030, recommending the formation of a broad, multi-stakeholder alliance, involving the UN, to create a platform for sharing digital public goods and data. All things touted by blockchain advocates as potential benefits of using a shared, distributed ledger.
Three months later, the crypto fund prototype was ready. According to the final fund description presented to UNICEF execs before today’s launch, the fund is limited to no more than 1,000 bitcoin, or about $8.1 million and 10,000 ether, or about $1.7 million. In total, the Innovation Fund manages $17.9 million, not counting today’s crypto donation, and has already received a commitment of an additional 8,000 ether, worth about $1.4 million at today’s price, from a single donor. Importantly, the fund will not convert the cryptocurrency into U.S. dollars or any other fiat currency. Three existing portfolio companies have been selected to receive the initial cryptocurrency dispersals. Argentina-based Atix Labs will receive 1 bitcoin, Mexico-based Prescrypto will receive 50 ether, and Tunisia-based Utopixar will receive 50 ether. In total, the existing Innovation Fund has already backed six blockchain companies in a portfolio of 72 companies from 42 nations.
“The UNICEF Crypto Fund provides an amazing opportunity for us to work collaboratively with UNICEF teams around the world,” says Aya Miyaguchi, executive director of the Ethereum Foundation, which will also be providing technical support to UNICEF and its blockchain portfolio as part of the investment. “UNICEF has a network of 190 offices across the world that brings the Ethereum ecosystem the ability to work with leading minds in regions that could benefit the most from Ethereum technology.”
While Lomazzo and the rest of her team hope the Crypto Fund helps them tap into the $170 billion collective market cap between bitcoin and ethereum, there’s actually a second, potentially bigger reason for the non-profit to accept and invest in crypto. At the time of launch only general donations can be accepted, but in the future, the Crypto Fund is especially well suited for directed donations where a donor can specify that his or her funds only be used to purchase pencils for school girls in a particular region, for example, and they could have 100% certainty that’s exactly what happened. Because ethereum and bitcoin transact on shared, public ledgers the flow of funds can be easily tracked from donation to purchase. A 2018 report in the Journal of Accounting, Auditing & Finance showed that charities displaying a seal of transparency from the nonprofit GuideStar experienced a 53% increase in donations over the following year.
“We’re working on a way to actually have a visual that’s reading from each chain that shows money going in and flowing,” says Lomazzo. “So, you no longer have to trust in the organization that the money has gone there. You can actually go ahead and verify yourself.”
Since UNICEF isn’t currently able to pay salaries, energy bills or rent in crypto the fund received a special waiver from the director of finance at UNICEF’s private fundraising and partnerships division saying that it would forego a fee it normally charges to recover its own costs. “We’re going into an era where our top leadership recognizes that UNICEF needs to be a financing and financial institution,” says Fabian. “And what that means is we need to be able to take our multi-billion budget a year and deploy it in much more sophisticated ways.”
The United Nations International Children’s Emergency Fund (it has since dropped the “International” and “Emergency”) was founded in 1946 to bring food, shelter and other support to children and young people in the aftermath of World War II. A part of the larger United Nations general assembly consisting of 193 member states working together under the auspices of solving a wide range of problems bigger than the borders of any single nation. Wealthier member states, such as France, Germany, Japan, and the United States form national committees to fund-raise and provide support in their own nations and around the world.
It is in these national committees where one of the most interesting aspects of the Crypto Fund comes into play. The United Nations is on what’s called international territory, meaning government laws and regulations don’t apply in United Nations Plaza on the East Side of Midtown Manhattan in quite the same way they do elsewhere. As a result of the UN’s extraterritoriality, as it’s called, each of the 190 national agencies that could potentially benefit from the crypto muscles built by the UNICEF office of innovation needs to sort through their own regulatory requirements. So while the fund is notable in what it says about UNICEF’s back-office capabilities, each country has to see to its own regulatory compliance before joining.
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Of the four countries already signed up for the Crytpo Fund, UNICEF France is the most mature. Starting in January 2018 UNICEF France executive director Sebastien Lyon started exploring ethereum as a new way to accept donations and says he has already lined up a “significant amount” of individual donors only interested in giving if the national committee doesn’t convert the donation to fiat. One of the biggest reasons France has taken the lead in accepting crypto donations is the existing regulations provided by state regulators for how to categorize cryptocurrency clearly described how to account for the funds, according to Lyon. Nevertheless, accepting crypto still required “extensive discussion with the regulators, and also with our auditors,” he added, something he’d like to help others avoid.
In the build-up to today’s announcement Lyon says he was approached by several other national committees, including Germany, the United Kingdom, and Switzerland, looking to learn from his experience. “I’m in touch with many of my colleagues in different countries in the world,” says Lyon. “They’re all very interested.”
Lomazzo’s work with blockchain extends far beyond the Crypto Fund alone. She heads a small, but growing team of five people, currently hiring a developer, sitting within the UNICEF office of innovation in the United Nations Plaza. Lomazzo reports to the office of innovation co-founder and head of the innovation fund, Chris Fabian and fund manager Sunita Grote on a number of blockchain initiatives.
On the operational outward-facing side, UNICEF is exploring how blockchain can be used to track internet connectivity in schools as part of its Project Connect. The Atrium is a platform being build by UNICEF to encourage UN agencies to share what they’ve learned about blockchain and to collaborate on projects. The Boost Token is being explored as a way to reward mentors for contributing open-source code and students for studying it. On the internal, back-office side of the work is a prototype now under construction using the ethereum smart contract language Solidity to automate certain back-office procedures.
As far as future adoption is concerned, in addition to Fabian’s work with Lomazzo and others in UNICEF, he is co-chair of the U.N. Innovation Network, a group of 1,200 people from all United Nations agencies. Following an Innovation Network report last year on all the blockchain work being done across the United Nations, the network is now in the process of assembling its first working group specifically on cryptocurrency, he says. “That means we can get people who are my counterparts from other agencies to take what we have done today, pick it up, put it into their agency, and apply it immediately,” says Fabian. “If one agency gets its legal people to sign off on something, it can basically be used by any other agency. It’s almost a cut and paste.”
“This obviously starts with the crypto fund,” Lomazzo added. “But the hope is that this can be expanded, and so that donations have more visibility into where they’re coming from, and where they’re going to.”