In This Newsletter
The Rising AI Economy: A New Era in Tech
Reshaping Global Digital Innovation Systems
The Future of Money
Announcing the Milken-Motsepe Prize in FinTech
First Issuance of Tokenized Municipal Debt in the US
Non-Banks and FedNow
The Rising AI Economy: A New Era in Tech
AI took center stage at this year’s Global Conference. The FinTech Program’s session, “The Rising AI Economy: A New Era in Tech,” focused on the rise of artificial intelligence and its impact on the economy. Nicole Valentine moderated Seth Boro of Thoma Bravo, Les Borsai of Wave Digital Assets, Sachin Dev Duggal of Builder.ai, X Eyeé of Malo Santo, and Martin Fichtner of Temasek.
Describing the state of AI’s current development, Duggal said, “A lot of how to explain what AI can do is artificial intelligence is trying at some point to mimic human intelligence. And there's an argument to say, at some point, it might become better than human intelligence.” Reflecting on the ethical questions of rolling out new AI models at scale Eyeé said, “While we have these tools that have great potential to propel us forward, without proper boundaries around them, without proper requirements around them for testing for safety, for fairness, we stand to collectively be the guinea pigs of them. And that can set us back in progress.” Panelists discussed the rapid rate of technological change in the AI space, how entrepreneurs are capturing that change to create new value, where investors see opportunities open, and the broader changes that AI is anticipated to bring to the creative economy, workforce development, education, reskilling, and policymaking.
Reshaping Global Digital Innovation Systems
The FinTech Program also focused on digital infrastructure modernization at Global Conference. The session “Reshaping Global Digital Innovation Systems” explored how emerging digital technologies like cloud computing, artificial intelligence, blockchain, and data assets were reshaping global digital infrastructure systems. Daniel Gorfine of Gattaca Horizons moderated Sri Chandrasekar of Point72 Ventures, Dennis Gada of Infosys, Sandy Kaul of Franklin Templeton, David Levy of Amazon Web Services, and Jean-Edouard van Praet of Brilliance Financial Technology.
Making the case for responsive internet that matches the needs of the modern digital economy, Levy said, “If you're going to do 24/7, 365 payment settlement around the world, you will need a global, highly available, highly secure infrastructure.” The panel also addressed challenges around responsible and explainable AI, retraining workforces, adopting new technologies with legacy systems, and the adoption of blockchain technology at financial institutions.
The Future of Money
On the digital asset policy front at Global Conference, Michael Piwowar led a 1:1 “Conversation with CFTC Chairman Rostin Behnam” on the future of capital markets regulation. They discussed the lack of a clear legal framework for digital assets from Congress, the limits of the Commodity Futures Trading Commission's (CFTC) powers in space, regulating AI in finance, the CFTC’s jurisdiction over digital assets, and climate derivatives.
Piwowar moderated a follow-up panel, “The Future of Money: Technology Powering Mobility, Access, and Impact,” with J. Christopher Giancarlo of Willkie Farr & Gallagher LLP, Adrienne Harris of New York State Department of Financial Services, Jelena McWilliams of Cravath, Swaine & Moore LLP, Michael Sonnenshein of Grayscale Investments LLC, and Ivan Soto-Wright of MoonPay. The conversation dove deeper into the future of digital currencies and their potential impact on the financial system from the perspective of former regulators, current regulators, and market innovators.
Panelists discussed the US’ need to take a leading role in developing international standards for digital assets. Calling for US leadership in the digital currency, Giancarlo said, “The United States dominated the last 50 years of the global economy because of the strength of our banks, the strength of our central bank, the strength of our currency, the strength of our regulation system that is dominating global conversations about how to regulate securities and financial markets. But we're in danger of losing that edge to other countries that are setting new standards for this innovation.”
Announcing the Milken-Motsepe Prize in FinTech
The Milken Institute, in partnership with the Motsepe Foundation, is proud to announce the launch of the Milken-Motsepe Prize in FinTech. The Milken-Motsepe Prize in FinTech offers $2 million in total prizes, including a $1 million grand prize for the winning team and an additional $100,000 distributed to each of the 10 finalist teams.
In emerging and frontier markets, particularly in rural areas, small and medium-sized enterprises, including micro-enterprises, are the backbone of local economies. While these enterprises represent over 90 percent of all global businesses and contribute to nearly 40 percent of gross domestic product in such economies, access to financial tools, such as financial reporting solutions and e-lending systems, remains limited, especially in emerging and frontier markets.
This initiative is designed to leverage the potential of FinTech solutions to break down barriers to financial inclusion. It also contributes to the achievement of key Sustainable Development Goals while promoting accessibility to digital financial solutions crucial for unlocking the full potential of small businesses.
The application window remains open until August 6, 2024. We invite you to share this information with your network and register here. Please send any questions you have to [email protected].
First Issuance of Tokenized Municipal Debt in the US
Ledger Insights reports that the city of Quincy, Massachusetts, issued $10 million of municipal bonds on JPMorgan Chase & Co.’s Onyx private-permissioned blockchain in a first-of-a-kind municipal bond issuance.
Quincy Mayor Tom Koch stated that this project is part of his efforts to “utilize emerging technologies to create greater financial participation and better economic outcomes for our constituents. The City of Quincy has invested in its innovation economy over the past number of years, and this is the natural next step towards the democratization of issuing City of Quincy bonds.” The tokenization effort is part of a broader initiative in Quincy to encourage local individual ownership of city bonds and lower the minimum check size to invest so that the city’s interest payments circulate in the local economy.
This January, John O’Keeffe, Blockwise Advisors, and Rick Coscia, Quincy’s strategic asset manager, participated as guest speakers at our FinTech Advisory Council meeting and shared their rationale for tokenizing municipal debt on the chain. They shared their view that blockchain technology deployed in the municipal debt markets can lower issuance costs, enhance liquidity, and reduce settlement times.
Global Government FinTech reports that Quincy follows in the footsteps of Lugano, Switzerland, the first municipality in the world to issue tokenized municipal debt. Paolo Bortolin, deputy chief financial officer of Lugano, and Eric Mason, chief financial officer of Quincy, discussed their respective cities’ approaches toward public-sector tokenization during last year’s Boston Blockchain Week.
Non-Banks and FedNow
Last year, in FinTech in Focus, we discussed the rollout of the long-anticipated FedNow program and its key differences from central bank digital currencies. FedNow enables participating financial institutions to send and receive instant payments 24/7. Recipient banks will have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments.
While this instant settlement has been valuable for banks, non-bank FinTechs in the US are required to work through a bank in order to access the national payments system. This increases the risk of critical delays, adds to consumer confusion around where in the system their payment currently resides, and results in higher costs to send funds.
In an op-ed to MarketWatch, Saema Somalya and Matt Cameron of Remitly, a non-bank remittance provider, discussed countries and regions around the world that allow direct connection to central banks by regulated non-bank payment providers. They cite the examples of the United Kingdom, Singapore, India, Brazil, Switzerland, Canada, and the European Union that have authorized, or are in the process of authorizing, nonbank access to national payment systems.