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FinTech in Focus—November 1, 2022

FinTech in Focus—November 1, 2022

In This Issue

Crypto Philanthropy

As the global cryptocurrency market has grown, so have the ranks of crypto philanthropists. As more wealth is held in digital assets, charities and foundations have responded by accepting donations in crypto. Charities benefit from the global reach, instant settlement, and low transaction costs that come from crypto donations. Some new charitable missions have even launched using proprietary blockchains.

This March, the Milken Institute’s FinTech team highlighted the unique role of cryptocurrency in fundraising efforts by Ukraine in the early days of its war against Russian aggression. In an October report on cryptocurrency use in Eastern Europe, Chainanalysis reported that crypto has played an unambiguously positive role in the conflict. Since the beginning of the war, cryptocurrency users have donated over US$65 million in humanitarian aid to the Ukrainian government’s crypto addresses. Other private Ukrainian groups have launched NFT collections or published their wallet addresses to raise money for humanitarian aid. The Kyiv School of Economics launched an NFT line to raise money to provide food, medicine, and transportation for Ukrainian refugees. Innovations in crypto philanthropy have enabled Ukrainian charities to quickly receive funds from around the world at a low cost.

The United Nations has also been experimenting with NFTs as a fundraising tool. UNICEF’s Giga initiative, which seeks to connect all schools to the internet by 2030, is exploring the use of blockchain to raise funds for its mission. Its first NFT drop, Patchwork Kingdoms, was derived from Giga’s mapping data on schools and their connectivity levels. The collection has so far raised over $700,000. Innovation in philanthropy using blockchain is pioneering a new category of FinTech, coined AidTech. 

One of the world’s most ambitious crypto philanthropy projects is GoodDollar. The protocol seeks to reduce wealth inequality through universal basic income that can be claimed on its blockchain. The value in the GoodDollar reserve comes from the interest that is generated by Supporters who stake cryptocurrencies in decentralized third-party protocols. Through the amassed reserve interest, G$ coins are minted. They are used to pay Supporters market-rate interest payments, while a daily amount of G$ coins is set aside to be distributed as basic income to people around the world known as Claimers. 

CFPB and Stablecoins

This October, the Consumer Financial Protection Bureau (CFPB) published its response to the Financial Stability Oversight Council (FSOC) report on digital assets. The report highlights stablecoins as a critical piece of the crypto economy’s infrastructure as both a tool for traders and its potential as a future payment solution. The CFPB emphasized the risks of deposit insurance misrepresentation, fraud, hacks, and scams that could follow the widespread adoption of stablecoins in their current unregulated form.

The CFPB echoed last year’s report on stablecoins from the President’s Working Group on Financial Markets, recommending that should Congress fail to pass comprehensive legislation, the FSOC could consider using its existing authorities to enhance the regulation of stablecoins. The CFPB notes that the FSOC could designate activities conducted with stablecoin as potential systemically important payment, clearing, and settlement activities under Title VIII of the Dodd-Frank Act. Without legislation establishing a clear regulatory framework for assets like stablecoin, regulators may have to adapt existing regimes for the digital asset industry. 

Milken Institute FinTech in Austin

FinTech Director Nicole Valentine moderated three panels at the Reuters’ Momentum Tech conference in Austin. The first panel, Unlocking Bitcoin: The Transformation of a Nascent Industry Technology, featured a one-on-one discussion with the CEO of Hut 8 Mining, Jaime Leverton. The conversation followed Leverton’s professional journey as a female leader in the crypto industry. The discussion also focused on the ESG concerns around bitcoin (BTC) mining and the energy-intensive proof-of-work consensus mechanism. Leverton offered a unique perspective as a CEO of one of the world’s largest BTC miners about the role miners can play in maintaining grid stability and in fully monetizing energy production. She emphasized that proof-of-work is an intentional feature of blockchain’s original design, offering security that proof-of-stake cannot replicate. 

Valentine then moderated the panel The Power of Digitalization and Web 3.0 Technologies to Revolutionize Healthcare. The discussion featured insights from a diverse range of speakers on how the digital ecosystem is reshaping how professionals use healthcare data. Ray Bajaj, chief technology officer of Cardinal Health, discussed how blockchain technology could improve cost transparency and enable real-time settlements in the industry. Lisa Cortez, PhD, co-founder & CEO of Moody Mink Society, focused on how an immersive metaverse could be leveraged as a tool for mental health professionals. Cameron Fox, health tech lead at the World Economic Forum, highlighted how the importance of a bottom-up approach to digitization focused on the end user’s experience. Anika Gardenhire, chief digital officer at the Centene Corporation, cautions that as technologies like AI and blockchain are applied to health care, the human elements of care should not be neglected. Gardenhire stressed the need for diverse clinical trials to guard against discrimination from AI systems deployed in health care. 

The panel Empowered Entrepreneurs: How are Financial Markets Boosting Accessibility & Inclusion closed out the event. Valentine spoke with Gaia Bellone, chief data scientist at Prudential Financial, and Bridget Abraham, chief compliance officer at Remitly. The conversation covered the growth of customer-centric FinTech innovation and innovative approaches to financial accessibility and inclusivity. Bellone focused on the value of big data in financial services and how it can empower consumers to make informed decisions. Abraham added that global payments networks and mobile computing have enabled unprecedented global financial connectivity.

Web3 at the Asia Summit

At the ninth annual Milken Institute Asia Summit this September, industry experts and thought leaders in the crypto field discussed the recent developments in the crypto economy on the panel Forward Momentum for Web 3.0 and DeFi. The panel focused on the evolving global regulatory environment, the implications of the Ethereum Merge, and emerging non-financial use cases for blockchain technology. Speakers included Leon Marshall of Genesis Trading, Sopnendu Mohanty of the Monetary Authority of Singapore, Richard Teng of Binance, Staci Warden of Algorand Foundation, and Jihan Wu of Matrixport.