教學大綱 Syllabus

Although technically defined as the premise that the density of transistors on an integrated circuit doubles about every two years, Moore’s Law is read generally to project the rapid rate of technological change. For most students in this Class, technology will have moved at a particularly rapid scope, with the internet era ushering in dynamic changes to how societies and businesses conduct information sharing, social communities and commerce. The internet joined with cellular bandwidth to birth the smartphone and with cryptography to create the digital asset era.

Law and policy is struggling to keep up with technological change and the rate of change. When the Dodd-Frank Act was passed in 2010, the iPhone 4 was one month old and the Bitcoin network had been stacking blocks for just two years. Now smartphones are ubiquitous, CNBC tracks bitcoin prices alongside the S&P and the Arrow of Time in technological progress continues to drive the decentralization of all aspects of the global economy, including financial services.

Banks have long been one-stop shops for financial services. Financial technology firms (fintechs), leveraging the sharing of personal customer bank account data, have quickly emerged to unbundle aspects of financial services and rebundle them on platforms. The pace of platformization has picked up since the Global Financial Crisis of 2008, yet financial laws and regulations have not kept pace. Customer liability protections do not extend to the full extent to nonbank-provided mobile payment transactions. Customer and data protection laws were passed in the 1970s long before the advent of fintech services and products. 

Meanwhile, money is making a leap in evolution. From commodity-based currencies to fiat-based currencies that support commercial bank money and mobile payments, we now see an emergence in blockchain-based digital assets, starting with Bitcoin in 2009. Bitcoin promises a censorship-resistant asset that may be freely transferred and potentially used as a central bank-policy remote store of value and unit of account (though more easily conceived than realized). Questions about whether central banks should issue their own form of digital currency became more pressing in 2020 when Facebook announced now-abandoned plans to issue a digital currency. Now central banks around the world are exploring issuing central bank digital currencies or CBDCs, including China’s digital yuan. These developments raise important questions of the modernization and digitization of global currencies (including the dollar) and what kinds of personal data can be collected on users of modern payment systems.

Finally, new technologies such as blockchain are driving further innovation in financial services. After the advent of native cryptocurrencies like Bitcoin and Ethereum with high price volatility, stablecoins were developed with the goal of being more “stable”. The Bitcoin and Ether native assets, along with stablecoins such as USDT and USDC, are the backbone of a growing technological ecosystem in which financial services, commercial, consumer and informational relationships are being reimagined and, in some cases, redefined.  However, it is uncertain under US laws or regulations if these digital assets powering these economies are commodities, securities, or money, or how these reimagined relationships will be defined when the ethereal world meets law based on the corporeal. In particular, blockchain technologies are driving decentralization of financial services, and perhaps the largest legal and policy question of all is how should decentralized finance (DeFi) fit in our current framework of laws and regulations.

Pronounced across the backdrop of technological change and advancement is the headline grabbing attention of both promise and failure. Both the FinTech economy and digital assets have seen enormous growth and “hype” cycles. In 2022, we witnessed a number of failures in the crypto industry from 3Arrows to Celsius, culminating in the spectacular collapse of FTX. Both the hype cycles and the failures raise important policy questions of the role of law and of regulators in new, more borderless economies where commercial and legal arrangements look less like the predecessor economy around which bodies of law have been formed.