Trust and Money or Value Transfers: A study of the implications of global value conflict generated by UN Security Council Resolution 1373

Trust is a fundamental aspect of any given functional society. However, since late September 2001, the UN approach to global financial governance appears to have been driven by distrust of other less formalized money or value transfer (MVT) systems. At the core of this ‘Global Regulatory Effort’ (GRE) is UN Security Council Resolution (UNSCR) 1373, which mandated that states legislate to regulate all informal MVT systems. In particular, the MVT system known as ‘hawala’ was implicated by US authorities in the funding of the acts of terrorism committed on September 11 in 2001. Although the focus of this multilateral effort was predominantly on the Islamic hawala system, the regime targeted any MVT system not linked to an established commercial banking operation. In this way UNSCR 1373 put a line in the sand between trustworthy and untrustworthy financial service providers. The necessity of this unprecedented step was ostensibly in order to prevent any future global acts of terrorism and maintain international peace and security. However, the regime’s approach implicitly legitimized formal Westernstyle financial systems while delegitimising all others. This study contends that a significant implication of this securitized approach to global financial governance was the creation of a Global Trust Conflict (GTC). The Global Financial Crisis of 2007/2008 and the adoption of Bitcoin as legal tender by El Salvador emphasize the significance of this Conflict. Moreover, the emergence of blockchain technology, Decentralized Finance (DeFi), and Distributed Ledger Technology (DLT) represents a new and challenging front in which the implications of the Conflict may be significant. Particularly in terms of the prevailing nature of trust provision services throughout the global economy. As a result, new possibilities for the shape of global order have arisen as state and private interests compete to influence the future of remittances. This research argues that the UNSCR 1373 mandate is anti-competition and served to institutionalize distrust of non-bank MVT systems. This includes traditionally informal remittances and emergent decentralized value transfer systems built on blockchain technology. This thesis concludes that a Global Trust Conflict exists, which constitutes the most significant barrier to regulatory efficacy and compliance aimed at MVT systems

The role of private and public regulation in the case study of crypto-assets: The Italian move towards participatory regulation

With the Digital Financial package (MiCA, DLT Pilot, and DORA, later on complemented by the DAC8 proposal) the European Union seeks to establish an appropriate legal framework for crypto-assets showing a financial nature. The package represents a first attempt to regulate a complex and emerging phenomenon, characterised by significant trade-offs. Unsurprisingly, in this early stage of the law-making process several relevant aspects of the crypto environment remain unaddressed, such as pure DeFI models, DAOs, and NFTs. Such regulatory gap is to a large extent attributable to the difficulty of addressing technologically complex issues through command-and-control top-down legislation. The improvements delivered by the Better Regulation Agenda are not enough to solve this conundrum. In this context, the Communication by the Bank of Italy on Decentralised Technology in Finance and Crypto-assets and its first move, the smart-contract MoU, provide an interesting case study to discuss the potential of ‘participatory regulation.’ This experimental form of regulation tries to get the most out of co-regulation, self-regulation, and command-and-control, combining their characters with the view of reconciling the technology neutrality principle with technology-based regulation. Participatory regulation aims to bridge the public and private sector in order to strike a right balance between flexibility and legal certainty, without stifling innovation

Blockchain and gender digital inequalities in Africa: A critical afrofemtric analysis

Advances in the technological sphere are synergistic with society’s progression. Technological innovations result in social realities, and these correspondingly remodel technologies to reconcile their functions and values with society’s needs. The birth of blockchain ushered in euphoric pronouncements about its disruptive potentialities for low-resourced societies. While dominant discourses frame it as a tool for enabling grassroots participation in socioeconomic activities, they ignore the societal embeddedness of innovations. A central premise of this study is that the modalities of blockchain’s adoption reflect, and to an extent cement, the inequitable gender power dynamics of its context. Drawing on principles of gender justice from my original critical theory afrofemtrism, technofeminism, and the social construction of technology, I examined the adoption of blockchain technologies in Ghana and its engagement with gender digital inequalities. My empirical data is from 33 qualitative interviews with participants in the blockchain economy. I found that investing and trading in cryptocurrency are the principal blockchain activities in Ghana. This evinces the perception of low entry barriers without needing specialized education. Additionally, participants are overwhelmingly male, and the women in the space navigate a complex existence of relegation and comity. Their presence in this male-dominated space opens them to ridicule, and yet they benefit from better transactional opportunities as people perceive them to be more trustworthy than the average man. Blockchain could engender financial emancipation for women and other marginalized social groups. However, conditions like the compound effect of inhibiting familial, societal, and cultural socialization on gendered interests and progression undercut these affordances. Blockchain in itself is, therefore, not a panacea. Interventions for social change must include gender justice-conscious policymaking, as well as nationwide conscientization of the underpinnings of gender digital disparities. This study’s findings are integral to advancing studies in gender disparities in a sociotechnical arena. It also contributes to knowledge emanating from the Global South, particularly regarding emerging technology

Travels along the hype cycle: a set of blockchain applications and the economic processes they impact

Some commentators refer to blockchain as a potential General Purpose Technology. Yet despite a plethora of cryptoassets and projects, it has struggled to gain traction beyond payments and price discovery. This thesis explores how the technology is being applied to better understand the potential and risks of deploying blockchain. It examines four different use cases with econometric and case study methods: (1) Bitcoin mining as the token incentivized processing of records, (2) Initial Coin Offering tokens as a form of venture financing, (3) Uniswap the decentralized exchange and (4) Kompany improving the data integrity of compliance records via notarization to a public blockchain. It finds that blockchain enables capabilities that did not exist before, but that these capabilities are bounded by trade offs and developer priorities. Ultimately this research expands the literature on blockchain applications and argues that blockchain does not build better systems, but different systems that can achieve different objectives. It provides evidence that firms and society are gradually traversing the hype cycle, deploying blockchain, solving real world economic problems and creating value

A Review of Central Bank Digital Currencies

This is a review paper on the exploratory research done by various central banks and international organisations on CBDCs and the framework to be followed for implementing these CBDCs so that the monetary system of a specific country remains unaffected. CBDCs and cryptocurrency in general as we know have become quite popular and are the talking point for many research scholars, economists and investment analysts. While many believe cryptocurrencies to have no intrinsic value, the value of the underlying technology i.e blockchain is something that can be argued upon. CBDCs remove the major cons of cryptocurrency by providing stability to the volatile cryptocurrency market and by acting as a legal tender thereby gaining the trust of retail public. Many governments believe that the introduction of CBDCs into the economy could simplify the payment’s structure thereby increasing the velocity of money leading to higher GDP growth. But one possibility that shatters this glass of optimistic views is the possibility of disintermediation of banks which could adversely affect the credit creation capacity of the country and disintegrate the entire monetary policy formation mechanism. Therefore, though the concept of digital currencies may excite many people, its adoption in an economy should be considered only after thorough research and pilot programs conducted by the central banks

The Capital Commons: Digital Money and Citizens\u27 Finance in a Productive Commercial Republic

All societies must address two questions where the organization of productive activity is concerned. The first is whether production will be mainly publicly managed, privately managed, or \u27mixed.\u27 The second is whether the financing of production will be mainly publicly managed, privately managed, or mixed. In the American commercial republic, we seem more or less to have answered the \u27who does production\u27 question to our own satisfaction. From the founding era to the present, we have elected to leave production primarily, though not of course solely, \u27in private hands.\u27 Where the financing of production is concerned, on the other hand, we have been more ambivalent. For the past 160 years, our financial system has operated as a public-private franchise arrangement. At the core of our franchise lie the sovereign public (the \u27public\u27 of our \u27republic\u27) and its money-modulator – the issuer and manager of its monetized full faith and credit, its \u27money\u27 – on the one hand, and the private sector financial institutions and markets we publicly license to allocate most of the resultant Wicksellian \u27bank money\u27 or \u27credit-money\u27 on the other hand. At the periphery of the franchise lie those institutions and markets that \u27shadow bank\u27 through relations with the banking core. In recent years, developments in several distinct spaces have prompted what amounts to a broad reassessment of our hybrid financial arrangements. One such development is weariness with our system\u27s penchant for over-generating public credit that fuels bubbles and busts rather than production, a product of leaving our public capital - by far the greater part of investment capital - to private management. This is what the author has long called poor credit modulation. Another ground of critique is our hybrid system\u27s poor record on what the author has long called credit allocation, from which modulation turns out to be inseparable. Our morbid fear of explicitly, rather than implicitly, ‘picking winners and losers’ is the culprit here. Finally, other sources of disenchantment are our system\u27s long-term worsening of inequality, the scandal of commercial and financial exclusion our system permits, and the promise offered by new financial technologies where ending both that and leaky monetary policy are concerned. The current Covid pandemic and recent murder of George Floyd of course underscore these sources of disillusion. This article embraces these critiques, which the author himself has leveled continuously over the past fifteen years, argues that privately ordered production requires publicly ordered finance, and shows how to order finance publicly on a Fed balance sheet forthrightly recognized as a Citizens’ Ledger. New public investments will make up the asset side of the upgraded Fed balance sheet, while a corresponding system of digital public banking through ‘FedWallets’ will upgrade the liability side of the same. Newly restored regional Fed functionalities (\u27Spreading the Fed\u27), an FSOC-inspired National Reconstruction and Development Council (NRDC) and its financing arm (a restored RFC), and a price-stabilizing \u27People\u27s Portfolio\u27 round out the new system of Citizens\u27 Finance. In the course of its arguments, the article traces all salient consequences that flow from its overhaul of our system of financing production, from banking through ‘shadow banking’ to the capital markets. It also makes some surprising discoveries along the way. Among these is that full separation of Fed and Treasury and hence monetary and fiscal policy, itself an artifact of franchise finance and hence the false hope of separating credit modulation from credit allocation, is no longer tenable. Another is that global central bank digital currency (CBDC) development is now corroborating much of what the article argues

The Capital Commons: Digital Money and Citizens\u27 Finance in a Productive Commercial Republic

All societies must address two questions where the organization of productive activity is concerned. The first is whether production will be mainly publicly managed, privately managed, or \u27mixed.\u27 The second is whether the financing of production will be mainly publicly managed, privately managed, or mixed. In the American commercial republic, we seem more or less to have answered the \u27who does production\u27 question to our own satisfaction. From the founding era to the present, we have elected to leave production primarily, though not of course solely, \u27in private hands.\u27 Where the financing of production is concerned, on the other hand, we have been more ambivalent. For the past 160 years, our financial system has operated as a public-private franchise arrangement. At the core of our franchise lie the sovereign public (the \u27public\u27 of our \u27republic\u27) and its money-modulator – the issuer and manager of its monetized full faith and credit, its \u27money\u27 – on the one hand, and the private sector financial institutions and markets we publicly license to allocate most of the resultant Wicksellian \u27bank money\u27 or \u27credit-money\u27 on the other hand. At the periphery of the franchise lie those institutions and markets that \u27shadow bank\u27 through relations with the banking core. In recent years, developments in several distinct spaces have prompted what amounts to a broad reassessment of our hybrid financial arrangements. One such development is weariness with our system\u27s penchant for over-generating public credit that fuels bubbles and busts rather than production, a product of leaving our public capital - by far the greater part of investment capital - to private management. This is what the author has long called poor credit modulation. Another ground of critique is our hybrid system\u27s poor record on what the author has long called credit allocation, from which modulation turns out to be inseparable. Our morbid fear of explicitly, rather than implicitly, ‘picking winners and losers’ is the culprit here. Finally, other sources of disenchantment are our system\u27s long-term worsening of inequality, the scandal of commercial and financial exclusion our system permits, and the promise offered by new financial technologies where ending both that and leaky monetary policy are concerned. The current Covid pandemic and recent murder of George Floyd of course underscore these sources of disillusion. This article embraces these critiques, which the author himself has leveled continuously over the past fifteen years, argues that privately ordered production requires publicly ordered finance, and shows how to order finance publicly on a Fed balance sheet forthrightly recognized as a Citizens’ Ledger. New public investments will make up the asset side of the upgraded Fed balance sheet, while a corresponding system of digital public banking through ‘FedWallets’ will upgrade the liability side of the same. Newly restored regional Fed functionalities (\u27Spreading the Fed\u27), an FSOC-inspired National Reconstruction and Development Council (NRDC) and its financing arm (a restored RFC), and a price-stabilizing \u27People\u27s Portfolio\u27 round out the new system of Citizens\u27 Finance. In the course of its arguments, the article traces all salient consequences that flow from its overhaul of our system of financing production, from banking through ‘shadow banking’ to the capital markets. It also makes some surprising discoveries along the way. Among these is that full separation of Fed and Treasury and hence monetary and fiscal policy, itself an artifact of franchise finance and hence the false hope of separating credit modulation from credit allocation, is no longer tenable. Another is that global central bank digital currency (CBDC) development is now corroborating much of what the article argues

Compliance Elliance Journal: Compliance in Unprecedented Times

Therefore this edition of CEJ is dedicated to pressing criminal and compliance-related questions in connection with the coronavirus-pandemic. Furthermore we will focus on another branch of digitization: Namely cryptocurrencies and financial technology. The key issue of last CEJ-edition, Corporate Criminal Liability, will be deepened, as there have been notable (and given the current situation, questionable) developments in the German legislative process. Fittingly, the topic of whistleblower protection in Switzerland will be addressed and two books, dealing with the modern legal advice market, will be reviewed

The Authority of Distributed Consensus Systems Trust, Governance, and Normative Perspectives on Blockchains and Distributed Ledgers

The subjects of this dissertation are distributed consensus systems (DCS). These systems gained prominence with the implementation of cryptocurrencies, such as Bitcoin. This work aims at understanding the drivers and motives behind the adoption of this class of technologies, and to – consequently – evaluate the social and normative implications of blockchains and distributed ledgers. To do so, a phenomenological account of the field of distributed consensus systems is offered, then the core claims for the adoption of systems are taken into consideration. Accordingly, the relevance of these technologies on trust and governance is examined. It will be argued that the effects on these two elements do not justify the adoption of distributed consensus systems satisfactorily. Against this backdrop, it will be held that blockchains and similar technologies are being adopted because they are regarded as having a valid claim to authority as specified by Max Weber, i.e., herrschaft. Consequently, it will be discussed whether current implementations fall – and to what extent – within the legitimate types of traditional, charismatic, and rational-legal authority. The conclusion is that the conceptualization developed by Weber does not capture the core ideas that appear to establish the belief in the legitimacy of distributed consensus systems. Therefore, this dissertation describes the herrschaft of systems such as blockchains by conceptualizing a computational extension of the pure type of rational-legal authority, qualified as algorithmic authority. The foundational elements of algorithmic authority are then discussed. Particular attention is focused on the idea of normativity cultivated in systems of algorithmic rules as well as the concept of decentralization. Practical suggestions conclude the following dissertation