New report highlights opportunities for digital assets to empower businesses in displaced communities

• New report by the EBRD and Block, Inc. shows digital assets and blockchain technologies can help support the financial inclusion of businesses in displaced communities
• Ukrainian entrepreneurs use bitcoin and digital wallets to overcome financial displacement
• Report highlights public-private partnerships are needed to improve financial and digital literacy and expand digital financial infrastructure

Digital Assets, including bitcoin and stablecoins, can foster financial inclusion for businesses in displaced communities, according to a new report by Block, Inc. and the European Bank for Reconstruction and Development (EBRD).

The report, published today, addresses the critical issue of financial exclusion among displaced populations worldwide, and highlights the potential of mobile, digital, and digital asset-based financial services to support displaced businesses.

As the number of forcibly displaced individuals in 2023 reaches 117.2 million globally, according to the United Nations High Commissioner for Refugees (UNHCR), and with more than 376 million people displaced by climate-related disasters since 2008, the need for financial innovations that deliver economic empowerment to displaced communities has never been more pressing.

The report notes that more than 75 percent of adults in countries experiencing humanitarian crises live outside the formal financial system, leaving them unable to rebuild their lives or businesses, due to the lack of recognised assets or documentation to use as collateral.

"Displaced populations often face compounded challenges, including being perceived as high-risk by financial institutions due to difficulties in meeting identity requirements and the unpredictability of their incomes," the report notes. "These challenges significantly hinder their ability to access essential financial services, exacerbating their already precarious situations."

The joint report from Block, Inc. and EBRD underscores the potential of digital assets, including bitcoin and stablecoins, to address some of these challenges. Unlike traditional financial systems, blockchain-based solutions do not rely on legacy infrastructure, which can make them more reliable, affordable, and accessible to displaced entrepreneurs. The report emphasises the benefits of self-custody wallets, which enable safe cross-border storage and access to funds, giving individuals and micro, small and medium-sized enterprises (MSMEs) control over their assets during conflicts or emergencies - and provides real-life use cases from Ukrainian refugees.

"The successful use of digital assets following Russia's invasion of Ukraine provides a powerful example of how these technologies can offer practical support in crisis situations," the report states.

Micro, small, and medium sized businesses are highlighted in the report as crucial to economic growth and stability, especially within migrant, displaced, and diaspora communities. In emerging markets and developing economies, MSMEs account for approximately 78 percent of employment.

However, the inability of displaced entrepreneurs to access financial services hinders migrant integration and exacerbates social issues such as homelessness.

Despite the promise of these technologies, the report acknowledges the barriers to their widespread adoption, including regulatory challenges, financial education, and connectivity issues. The report advocates for public-private partnerships to overcome these obstacles by improving financial and digital literacy, expanding digital financial infrastructure, and creating enabling regulatory frameworks.

Paul Mortby, Head of EMEA Policy for Block, Inc, stated "Today's report highlights how emerging technologies and financial innovations can rise to meet some of the biggest challenges faced by nations today. As the number of displaced communities and climate change continues to grow, it is critical that we support the development of financial tools that restore agency and economic empowerment to those impacted, and help them to integrate into their new communities. The potential of emerging bitcoin and stablecoin solutions to help alleviate the challenges faced by displaced populations is significant."

Jacek Kubas, Head of the Digital Hub at the EBRD said: "Innovative technologies such as digital wallets, online payment solutions and blockchain can play a crucial role in supporting unbanked populations and refugee communities. They are already proving invaluable in conflict zones such as Ukraine, where displaced MSMEs rely on them to maintain access to assets and to ensure business continuity. The EBRD is always exploring new ideas and products that could increase SMEs' financial inclusion, access to finance and a greater integration with new markets, and as we expand into Sub-Saharan Africa, such insights will help guide our work and maximise impact there as well."

For more information or to access the full report, please visit block.xyz/ebrd.

Block, Inc. (NYSE: SQ) (formerly, Square, Inc.) is a global technology company with a focus on financial services. Made up of Square, Cash App, TIDAL and TBD, it builds tools to help more people access the economy. Square makes commerce and financial services easy and accessible for sellers with its integrated ecosystem of technology solutions. With Cash App, anyone can easily send, spend or invest their money in stocks or bitcoin. Afterpay brings Square and Cash App together, connecting consumers and businesses. Artists use TIDAL to help them succeed as entrepreneurs and connect more deeply with fans. TBD is building an open-source platform and developer infrastructure that enables everyone to access and participate in the global economy.

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