Technological advancement over the past several years has brought FinTech and cryptocurrency to the forefront of our public discourse. While these innovations to both domestic and international financial institutions are here to stay, a select few individuals have a deep understanding of what they are and what this signifies for the future of banking.
Jimmie Lenz, an executive in residence and director of the Master of Engineering in FinTech and Cybersecurity at Duke’s Pratt School of Engineering, provides some answers for those who are looking to learn more about cryptocurrency and FinTech and offers advice to lawmakers as they consider legislation and implementation of regulations for the industry.
What is a common misunderstanding amongst federal policymakers about crypto and FinTech?
I could write a book about each of these, maybe several. Probably the most pronounced misconception around FinTech is that this is something new. I feel like I’ve been working in FinTech during my over two-decade career in financial services. Crypto is a bit different, this is quite new and should be approached, as with any new technology, with an eye toward the future opportunities that it may facilitate.
What are the primary considerations lawmakers should keep in mind when shaping legislation and regulations?
Understanding that these are both delivering products and services that are new, and that they likely will not conform to historic notions. Understanding the offerings that these technologies provide, as well as the technologies themselves, is of paramount importance. Trying to shape legislation based on anything less than a good working understanding could be quite catastrophic.
What does the Biden administration’s executive order on cryptocurrencies get right, get wrong, and/or leave unaddressed?
Let’s face it, this executive order was pretty light in terms of tone and direction, which is certainly better than uninformed legislation, but at this point in time, it should have been a bit more concise. There are a number of agencies that this [responsibility] has been pushed to, and that’s likely to end in more of the same regulatory agency posturing that we’ve seen before. It would be great if a few legislators on both sides of the aisle could look at the morass of regulatory agencies and possibly use this as an opportunity to start to move into the 21st century.
In your eyes, what does the future hold in terms of how we exchange money and protect consumer privacy?
These are two vastly different questions in my mind. Privacy involves ownership, in this case of personal data. Like other assets that one owns: it can be sold, traded and sometimes stolen; it has value and like all valuable assets there is a market for it. “Money” whether fiat, crypto, or something else is a store of value and technology has allowed these stores of value to be exchanged in different ways. As we have seen, this has facilitated people around the world at times of emergency, to exchange currency quickly, but there are opportunities to make commerce much more efficient and remove the “frictions” that often hamper trade.
What are the concerns if the U.S. doesn’t craft a comprehensive, well-informed policy around these topics?
There are two in my mind. The first is the competitive edge we will lose along with the companies and people that are developing these technologies. The second is the benefits that society will lose out on – this goes for government too – in delaying the use of things like digital currencies, digital wallets, etc.
What are privacy and corruption concerns if crypto is primarily regulated by the private sector?
People vote with their feet. If they are concerned, they simply won’t use a particular service, we’ve seen this time and again. My concern over regulation is that it will favor the legacy firms at the cost of new products and services being made available to the widest array of people.
By Lizzie Devitt, 6/8/22