Professor Chris Brummer: Georgetown Law’s Fintech Guru on IIEL’s “Fintech Week,” Cryptoassets and More

November 5, 2018

Professor Chris Brummer with Sheila Bair, former chair of the FDIC, at the start of IIEL's "Fintech Week" on November 5.

Professor Chris Brummer’s work in fintech is growing almost as exponentially as the field: including research and a “Cryptocurrencies, Initial Coin Offerings and the Law Seminar.” The course was recognized by CoinDesk in its ranking of Georgetown University as one of the Top 10 “blockchain universities,” measuring institutions’ investments in curriculum about technology.

As Georgetown Law’s Institute of International Economic Law (IIEL) hosted the second annual “Fintech Week” during November 5 to 8, we sat down with Brummer, IIEL’s faculty director, to talk about Fintech, cryptoassets and more, below. (A related story appeared on the Georgetown Law website after the event).

This is the second annual Fintech Week at Georgetown Law. What is Fintech and how has it emerged as an area of law?

Fintech refers to the technological applications developed by financial services professionals to service their clients and customers. It’s become a matter of interest for policymakers, regulators and lawyers because rules designed to ensure investor protection and financial stability do not anticipate the kind of technology arising and ways it is being leveraged to transform capital markets. In short, the means by which financial services are delivered are very different than in the past, and they do not depend on the same kinds of financial intermediaries that traditional banking and securities-related services have relied on.

This development has presented regulators with an array of very sophisticated questions. At a most basic level, authorities have to ask themselves whether the activities that are being engaged in are subject to financial regulation, or does the new way in which services are being rendered remove them from supervision? If, for example, you decide to offer the loans via the Internet, and syndicate loans instead of keep them on your balance sheet, are you engaged in “banking” and subject to applicable rules?

Just as important, even if the relevant activities are subject to regulation, how are you going to do it? This not infrequently generates the question, whom are you going to regulate? Traditionally, there has always been a financial intermediary that regulators could regulate in order to exercise their own mandates for investor protection or financial stability. But increasingly, where financiers and financial services professionals rely on decentralized networks like a distributed ledger, where you no longer have intermediaries — or at the very least, the intermediaries of the past — questions arise as to how one can possibly operationalize financial regulation.

[These] are the kinds of questions that presented themselves with the rise of the Internet. In that case, it became clear that almost anyone can contribute information, so how do you regulate that kind of decentralized network? Now, similar questions are arising in financial services, where you don’t necessarily have one infrastructural approach that’s dominating a particular service or space, or a service is being rendered that is not dependent on any one actor.

How did the idea for an entire Fintech Week come about?

I was in an informal conversation with U.S. Commodity Futures Trading Commission Chair Christopher Giancarlo a couple of years ago, and he mentioned…how great it would be if we had a forum for a rigorous, nonpartisan and analytical discussion of Fintech and financial regulatory policy. And the idea appealed immediately. At that point, then-Comptroller of the Currency Thomas Curry had just unveiled something called the Fintech Charter, essentially a new mechanism for fintech firms to engage in limited banking activities. The event attracted hundreds of people, and I felt that this was an area of the law that was of enormous interest to our students, alumni the regulatory community — and that Georgetown and the Institute could play a very important role in helping to raise the level of discourse and conversation in that space.

Given our location and our relationships with most of the regulatory agencies here in town, I thought, why not take that inspiration and begin to systemize a series of conversations for the public about financial technology and the law relating to it? Since then, it’s just grown in leaps and bounds — and morphed into Washington, D.C.,’s premier forum for discussing fintech. And it’s a distinctly Washington event — we’re hosting coversations here, at the International Monetary Fund and Capitol Hill. The entire Washington, D.C., regulatory and policy community has gotten involved.

What are some of the hot issues the conference is focusing on?

Some of the issues that are going to be of enormous interest are which cryptoassets should be considered a commodity and which should be considered a security, which ultimately goes to the question of how do you regulate bitcoin and other cryptocurrencies. That’s going to be a pretty interesting conversation. Another topic is, to what extent to cryptoassets impact financial stability and economic development in emerging economies. I’m particularly interested in some of our conversations on the use of alternative data in financial inclusion.

Who are some of the key participants? CFTC Chairman Chris Giancarlo, Sheila Bair, former chair of FDIC; Craig Phillips, counsel to secretary of Treasury; David Lipton of the International Monetary Fund; Joseph Otting, the Comptroller of the Currency, and the SBA’s Pradeep Belur are some of the names listed…

Our keynotes are virtually every head or leader of all of our regulatory agencies, many of whom, I know, are looking to make important, high-profile policy statements. I will be leading most of the conversations, except for at the IMF, where Professor Anna Gelpern will be talking with David Lipton — the number two person at the IMF.

One of the features will be a “Fintech Sharktank” with the McDonough School of Business? 

We’re inviting teams to compete in front of a panel of judges, and the entire audience will vote, on who has the best startup ideas for companies. Our “shark tank” will be coming right after the Chief Operating Officer from the Small Business Administration delivers comments on how the SBA assists small companies and startups with lending, particularly in the FinTech sector. It will also come after a discussion on how you put a price on the value of emerging technologies before they become mature. We’re trying to integrate not just legal concepts but also a real critical business component into the conference.

We asked the McDonough School of Business, alongside our two real world startups in New York, to build a team. Under Professor Reena Aggarwaal, and with John Jacobs, they’ve done some very interesting work on blockchain technologies. With their help, we’re going to have a student group from the MBA program competing alongside real-world entrepreneurs and start-ups, to try to impress our panel of venture capitalists and the audience.

What’s the breakdown between U.S. and international issues at Fintech?

There is more of an obvious emphasis on international issues on Day Two, because we are at IMF headquarters. But really, because fintech leverages digital platforms and the Internet, it is an inherently global or “international” subject.  For example, by definition, all cryptoassets are international and can be traded anywhere, anyone can participate. People can decide how they want to regulate them in their home jurisdictions, but it is inherently an international issue. The international aspect really pervades the whole conference. Bitcoin is traded in Korea, Japan, the United States. Our Securities and Exchange Commission can try to come up with a way to regulate it, but how do you regulate it when it’s traded outside of your national borders? That’s another challenge.

How does Fintech Week fit in with the mission of the Institute of International Economic Law?

Our mission is to think about how law relates to the global economy and the transactions and relationships animating it. And Fintech [Week] falls squarely within that remit. Fintech is about finance, it’s about money and inherently cross-border financial transactions. It’s why fintech is on the top of the agenda of financial regulators from the Financial Stability Board to the International Organization of Securities Commissions. It also transcends financial regulation, and touches on tax and even interstate commercial relations. Indeed, even trade negotiations frequently involve talks on financial technology and data.

How are students involved?

We have J.D. and LL.M. students who are “IIEL Fellows” who get a backstage look at events and conversations with some of the keynotes and panelists. (Students enter a competition in order to be an IIEL fellow.) They are also helping to welcome visitors and run the event. They will be everywhere — and hopefully wearing suits!

If you could do anything you wanted for the third annual Fintech Week at Georgetown Law, what would it be?

It’s hard to top the IMF and Capitol Hill, but we’re already looking forward to new ways of surprising people with both national and global regulatory authorities.