Since kicking off on the campus of Georgetown University Law Center in 2017, Washington DC’s Fintech Week has grown into one of the world’s top fintech policy conferences. For DC Fintech Week 2021, the conference will cover three main themes: the “Innovation”, “Inclusion”, and “Integrity” of the global financial system.

And we’ll again be joined by a range of interesting and important partners. This year, DC Fintech Week will be teaming up with The Bank for International Settlements on Day One to explore cutting edge developments in fintech policy, including issues of coordination and competition in international payments, digital assets and more.

In preparation for our virtual conference, we are requesting the submission of papers for consideration to be included in the conference. The deadline for submissions is Monday, August 23, 2021, at noon GMT. Selected papers will be featured on the conference website, and available as a resource to participants and presenters. Additionally, select authors might be asked to present their paper during Fintech Week as “Flash Presentations” for our global audience. Applications for virtual speakers for our live program will also be considered without an academic paper.

Possible agenda/paper topics include, but are not limited to: • Compliance and De-Fi • The Community Reinvestment Act in a Digital Economy • Central Bank Digital Currencies • Smart Contracts and Financial Inclusion • New applications for Alternative Data • Quantum Computing • De-Risking, and Pricing Crypto • Platform Gamification–and Nudges • MDIs, CDFIs and the Digital Economy • Fintech and National (In)security • ESG and Fintech.

The submission page for the Call For Papers can be found here!

With that in mind, I crunched the numbers and added an Addendum to the Working Paper.  The full paper, with the Addendum and attendant explanations, can be found here on SSRN.  The addendum reflected the information that I referenced in my recent SEC keynote speech.

The findings are as follows:

Table A.1

Table A.1 indicates that only 1.55% of all financial regulatory leaders have been African American.  Notably the table, like the Working Paper, presents the data in the most optimistic light possible.  It does not include heads of defunct agencies like the OTS, where none of its half dozen Directors (0%) were Black. Moreover, the two individuals who have served did so at arguably the smallest of all financial agencies.  No African American (0%) has served as the head of any of the most economically influential regulatory agencies.

As to the second query:

Table A.2

The findings here are sobering, and add context to the challenges outlined in the Working Paper. With only two identifiable African American Division Directors across the two agencies, ever, the data in Table A.2 point to a failure by virtually all past SEC and CFTC Chairmen, from Progressive Democrats to Conservative Republicans, to select or promote any African Americans to these key executive policy leadership roles.

We’ll be putting the programming online soon, but here is a conversation I had with Patrick Njoroge, the head of the central bank of Kenya on the future of Mpesa.  (If you’re interested in the podcast, you can find it here)

California Gov. Gavin Newsom signed legislation Wednesday that will require the boards of publicly traded companies based in the state to have at least one racially, ethnically or otherwise diverse director by 2021.

[….]

Under the new law, individuals who identify as Black, African-American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or who identify as gay, lesbian, bisexual or transgender, would be considered eligible for meeting the requirement.

My hunch is that under the right circumstances these changes could bring significant changes to corporate policy, especially for Silicon Valley firms whose Board make up lacks ethnic minorities. Among them: fiduciary duties might be exercised by new Board members in ways that prioritize mounting data about the higher returns on capital presented by diverse work forces–which in turn could catalyze significant changes in recruiting and promotions.  Management might also become more aware of how demographic changes might well usher in forms of cultural disruption that rival technological ones, leading them to take more socially responsible decisions in how they view the very missions of their firms.

Still, these statutory reforms are in themselves no panacea.  There will be Constitutional questions raised.  And in order to catalyze change, newcomers will have to not only have a seat at the table, but also the power to speak up.  As in democracy more generally, numbers matter. And although the statutory reforms might end up upgrading a company Board, they won’t necessarily change its culture if diverse members find themselves ignored or excluded.

I have the pleasure of presenting “What do CBDCs mean for derivatives law?” for the CFTC later today as part of the agency’s live Technical Advisory Committee proceedings.  I’m now up at NOON and will discuss:

• Basics of CBDCs
• Stablecoins and cryptographic vs. legal claims
• The potential/theoretical usage of swaps as CBDC facilitators
• Questions arising for regulated FCMs in light of their brokerage activities
• Implications for custodians and clearinghouses

Here are my slides (plus dial-in details for listening in can be found here):

SLIDES: What do CBDCs mean for Derivatives Law?

For more, see my post, which is available on Medium, see here.

I’ve tackled the definitional question of “decentralization” before in this column, when thinking through the challenges of blockchain-based financial ecosystems.  But “decentralized finance”—despite attempts by crypto proponents to monopolize the term—often refers to a range of broader developments that have even more profound repercussions across the fintech ecosystem.

In its simplest sense, decentralized finance is a structural term that relates to how software systems are built.  The key inquiry is whether operating systems run through a central point of control and administration. From this standpoint, permissionless blockchains epitomize blockchains to the extent to which, at least in principle anyone with the software loaded onto their laptops can compete to try to memorialize transactions on the Bitcoin ledger and acquire new Bitcoin in the process.

But decentralized finance need not relate to operating systems.  In a very real sense, it can also refer to hardware applications.  Consider Uber. Here, a distributed and far flung array of hardware (customer and driver cell phones) are the funnels through which transactions are consummated on the firm’s payment platform.

Or even the Starbucks “card”—the mechanism through which the company is essentially able to fund its operations in part through geographically dispersed deposits made through its millions of customers.  In the truest sense, it too serves as form of decentralized finance: By offering anyone the opportunity to store value onto a card an on its Mobile App, Starbucks has reportedly secured $1.6 billion in stored value card liabilities outstanding, nearly 6% of all of the company’s liabilities.

For the crypto-community, these latter examples can be especially perturbing because they speak to instances where transactions are still, whatever the hardware, still funneled through a centralized platform.  Individuals have accounts, and policies are ultimately commandeered and controlled by a specific firm. Thus whatever the operationalization of finance, control, many would observe, is ultimately centralized.

Still, crypto holds no control over decentralized control, should that be the point of definitional emphasis.  Besides the fact that plenty of crypto ecosystems reflect considerable control, fintech entrepreneurs have long developed technologies in even legacy infrastructures and ecosystems designed to wrest control from incumbent players.  Consider here the example of high frequency trading. Far from enhancing central points or nodes of influence, the ecosystem is largely designed to exploit pricing gaps in electronic trading platforms—and to enable trade execution autonomously, and independent of human decisionmaking.

An even better example can be found in the open banking.  Traditionally, banks have made key decisions about what to do with consumer and customer information.. But increasingly, new kinds of firms and fintechs—think Plaid—have worked to enable customers to control how their banking information is used, all in the service in better, customer-oriented financial services.  This kind of innovation is not just structural, depending on far flung APIs as nodes for information gathering—but also in terms of power, reversing the hierarchy of decisionmaking between banks and their customers.

The trick in all of this is, of course, that accompanying this decentralization of finance is a decentralization of the regulatory ecosystem itself.  Instead of top-down international legal systems, an increasingly broad array of regulators plot their course of actions for fintech. And where they do on a cross border basis, they don’t do so in terms of formal legal obligations, but usually do so via “soft law”—informal obligations subject to interpretation by regulators at the domestic level.

The full video can be found on C-SPAN by following the link below.

https://www.c-span.org/video/?454299-1/monetary-policy-financial-regulation