In 2023, Korean video game company WeMade pledged to donate the equivalent of one billion Korean won in Wemix tokens – a cryptocurrency linked to the blockchain platform of the same name – to Seoul National University. 

What seemed like a moment for celebration quickly descended into controversy, with the university eventually ceasing to accept cryptocurrency donations altogether. 

So, what happened? Shortly after the donation was made, WeMade reportedly liquidated a large share of its coins, causing a significant currency devaluation and meaning SNU’s donation was no longer worth so much – a problem given that the funds had been earmarked for a specific project. 

That wasn’t the only barrier. Under South Korean financial regulations, the university was also unable to open a corporate account for virtual asset exchange. With calls to change the law unanswered, the university was left holding on to a volatile currency it was unable to convert to cash. 

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Now Korean regulators are reportedly considering allowing the country’s universities to convert cryptocurrency for the first time – potentially opening a significant new fundraising stream for the country’s financially ailing sector. 

Elsewhere, universities are already cashing in on the crypto craze, most notably in the US. In 2021, the University of Pennsylvania received $5 million (£4 million) in bitcoin from an unnamed donor. A year later, Vitalik Buterin, co-founder of Ethereum, a leading blockchain, donated the equivalent of $9.4 million in USDC coin to the University of Maryland to fund public health research in the wake of the pandemic. 

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The Giving Block, a US-based platform that facilitates cryptocurrency donations to non-profit organisations, said that the higher education sector has been one of its “biggest growth areas” over the past two years, with Washington State University and Northeastern University among the company’s clients. 

“There are several things driving this, like the booming crypto market and broader mainstream adoption, but the biggest driver for schools is simply following the money,” said Pat Duffy, its co-founder. 

With analysts suggesting popular currencies like bitcoin will continue to grow in value this year, spurred on by newly inaugurated Donald Trump’s crypto-friendly rhetoric, universities could be set to benefit – if they are prepared to manage the risks that come with the volatile landscape. 

“For donors in the US, the biggest driver is the tax incentive,” said Duffy. “You can skip capital gains taxes on appreciated assets and still get a deduction for the full market value. 

“The donor pays no taxes on their appreciated crypto, and neither does the school. Donors across the country are eliminating tens of millions of dollars in tax liability by choosing to give with crypto, and giving larger gifts…as a result.”

For universities, accepting cryptocurrency may also allow them to target their fundraising at a younger, tech-savvy market. “They can attract more people if they accept crypto payments,” said Nir Kshetri, professor of management at the University of North Carolina. 

It’s not just donations where universities are capitalising. Some, like Bentley University, have begun accepting tuition fees in cryptocurrency, with significant implications for international students. 

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In Nigeria, for example, converting the naira to the US dollar to make fee payments can be a complicated process. For some, paying in decentralised cryptocurrency is simpler and faster, according to Kshetri. 

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However, a key risk for universities is the unpredictability of cryptocurrency markets, with fears compounded by the volatility of bitcoin in recent years. While the market is recovering, crashes such as the one experienced in 2022 have left a lasting impact and made some universities wary. 

“Right now it’s at a peak, but who’s to say we won’t see a return to what we saw two years ago when the bottom fell out?” cautioned Bill Stanczykiewicz, director of the Fund Raising School at Indiana University Indianapolis.  

According to Stanczykiewicz, best practice is to avoid holding on to cryptocurrency, even if it is predicted to increase in value. “What we say to fundraisers is if you get crypto, turn it into your national currency as quickly as you can,” he said, or use a platform like the Giving Block, which does this for you.

However, this approach isn’t universal. In Paraguay, Universidad Americana is less risk averse than some, evaluating the market before converting any cryptocurrency payments. 

Universities considering going down this avenue also need to consider the ethical aspects, said Stanczykiewicz, and whether such donations adhere to their institution’s values.

Specifically, the environmental impact of currencies like bitcoin is a concern for some. However, Kshetri argued, the coin has already been mined prior to the donation – that is, the damage has already been done. “Just to transfer that bitcoin from you to me consumes very little…electricity,” he said. 

Whatever your ethical view, those interviewed for this article agreed on this: cryptocurrency is here to stay and, for universities, it’s simply a question of how quickly they embrace it.

“Historically, it was regulatory uncertainty that made universities nervous about crypto acceptance and investing,” said Duffy. Today, he continued, in the US, “regulatory clarity and the political support we see on both sides of the aisle have cleared up those concerns”.

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With countries like South Korea set to provide a regulatory green light too, it may not be long before institutions around the globe follow in the footsteps of their US counterparts. 

helen.packer@timeshighereducation.com