Hilary Allen @ProfHilaryAllen Twitter profile

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Hilary Allen

@ProfHilaryAllen

5 months

I was very disappointed to see the SEC approve exchange-traded Bitcoin products for retail investors. Everyday investors will be harmed, crypto will be brought closer to the core of our financial system - and for what?

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Hilary Allen

@ProfHilaryAllen

2 years

Today, Lummis & Gillibrand launched their "bipartisan" crypto bill. It's bipartisan in the sense that senators from different parties are giving the crypto industry pretty much what it wants, but it doesn't honor the regulatory goals that Ds typically prioritize. A thread.

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Hilary Allen

@ProfHilaryAllen

2 years

I just posted my new essay, DeFi: Shadow Banking 2.0? TL;DR: DeFi is neither decentralized, nor very good finance, so regulators should have no qualms about clamping down on it to protect the stability of our financial system and broader economy.

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Hilary Allen

@ProfHilaryAllen

2 years

THIS is how crypto becomes systemically important. And with no real world productive capacity to compensate for that systemic risk. It’s like watching a car crash in slow motion.

Blockworks

@Blockworks_

2 years

BREAKING: Coinbase partners with BlackRock to offer crypto services to institutions

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Hilary Allen

@ProfHilaryAllen

5 months

Bitcoin and other crypto are at best a means of gambling. They will never be able to deliver on promises of financial inclusion, efficiency, decentralization, and privacy, for reasons I articulate in my new draft Fintech and Techno-Solutionism.

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Hilary Allen

@ProfHilaryAllen

2 years

I truly appreciate the appeal of decentralization in finance, but that's not what crypto is creating. Instead, we're just getting new avenues for institutional players to take our already hyper financialized system to eleven. See yesterday's headlines:

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Hilary Allen

@ProfHilaryAllen

2 years

Crypto is only worth what the next person is willing to pay, so the crypto industry always needs new investors. I find it deeply concerning that the potentially exploitative financial inclusion narrative is shifting to the developing world - predatory inclusion gone global?

Rest of World

@restofworld

2 years

We spoke with a dozen people from countries including Argentina, Venezuela, Iran, Iraq and Nigeria, who invested in Terra and its accompanying Luna token, and who have now lost thousands of dollars in savings. “I have nothing left, not even a penny.”

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Hilary Allen

@ProfHilaryAllen

2 years

Stablecoins can't be made truly stable without some kind of government backing - so should they even exist?

We’re asking the wrong questions about stablecoins

Real issue is whether these crypto assets should be allowed to exist at all

www.ft.com

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Hilary Allen

@ProfHilaryAllen

2 years

A succinct summary of my worries that crypto's financial inclusion/human rights narratives are just window dressing for predation: "these systems end up hiding a new elite, which is probably just an old elite in a new arena."

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Hilary Allen

@ProfHilaryAllen

2 years

I feel terrible for everyone losing their shirts in the crypto crash but I hope this knocks some sense into policymakers. If this is allowed to keep growing and causes a financial crisis, it won't be just crypto investors losing their shirts, as I show in

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Hilary Allen

@ProfHilaryAllen

1 month

Another epically bad stablecoin bill has just dropped (this one from Sens Lummis & Gillibrand) and so it’s time for another epically long tweet thread pointing out the ways in which this bill will make us worse off.

Lummis, Gillibrand Introduce Bipartisan Landmark Legislation to Create Regulatory Framework for...

WASHINGTON, D.C. – Today, U.S. Senators Cynthia Lummis (R-WY), member of the Senate Banking Committee, and Kirsten Gillibrand (D-NY), member of the Senate Agriculture Committee, introduced the...

www.lummis.senate.gov

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Hilary Allen

@ProfHilaryAllen

2 years

"The number of entities sufficient to disrupt a blockchain is relatively low: four for Bitcoin, two for Ethereum, and less than a dozen for most PoS networks." If blockchains aren't decentralized, what's the point? Why put up with energy costs/ransomware attacks/fin instability?

Tyler Gellasch

@TylerGellasch

2 years

DARPA funded an assessment of some blockchain stuff. Tl;dr: It says this shit is centralized and vulnerable. Lots to chew on, here. Makes me wonder if ⁦ @SECGov ⁩ wants to reconsider if Bitcoin is a security…

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Hilary Allen

@ProfHilaryAllen

2 years

Finally got my hands on a hard copy of my book! It feels like my own little victory over the supply chain…

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Hilary Allen

@ProfHilaryAllen

2 years

When the biggest proponents of crypto/blockchain/Web3 tech can't coherently explain its benefits (let alone justify its myriad externalities), that should be a major red flag. Financial regulators REALLY need to start listening to tech critics.

Charlie Warzel

@cwarzel

2 years

I wrote big ole newsletter about “the hollow abstraction” of Web3 and those videos of its biggest boosters struggling to articulate a concrete vision for their next big thing

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Hilary Allen

@ProfHilaryAllen

10 months

Rs on House FS and Ag Cttees have dropped text of their digital asset market structure bill, which they’re rushing into markup next week. There are many reasons to pump the brakes on this bill, and I’ll discuss some in this thread. But first - what’s really driving the rush?

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Hilary Allen

@ProfHilaryAllen

10 months

Crypto is now facing an existential crisis. The SEC is cracking down on securities laws violations, and most Americans have wised up to crypto’s problems, with 75% of Americans who have heard of crypto saying they don’t trust it. .

Majority of Americans aren’t confident in the safety and reliability of cryptocurrency

Concern among U.S. adults about cryptocurrency is broad, but some groups are more concerned than others. Only 18% are somewhat confident in crypto.

www.pewresearch.org

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Hilary Allen

@ProfHilaryAllen

10 months

As I explore in a new paper, VC has been driving the crypto industry, including by actively seeking to get the law changed to accommodate and legitimize it (a strategy known as “regulatory entrepreneurship”).

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Hilary Allen

@ProfHilaryAllen

2 years

When it comes to the goals of both investor protection and financial stability, this bill is a deregulatory departure from the status quo. It gives most jurisdiction over crypto assets to the CFTC, which has no investor protection mandate and far fewer resources than the SEC.

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Hilary Allen

@ProfHilaryAllen

2 years

It's go time! My new book, Driverless Finance: Fintech's Impact on Financial Stability is now available for pre-order:

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Hilary Allen

@ProfHilaryAllen

2 years

Why a lighter touch? Crypto lobbyists would talk about allowing innovation, but viz the letter which lays bare the fundamental flaws and limitations of the underlying technology. This is not innovation that merits a light-touch bespoke regulatory regime.

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Hilary Allen

@ProfHilaryAllen

1 year

Great reporting on the six (!) people who maintain Bitcoin's code. For all of those who think that software is set-and-forget and can operate autonomously, "Software needs more care and feeding than many people think"

Bitcoin’s Future Depends on a Handful of Mysterious Coders

Developers with power to change the cryptocurrency’s software hold an unorthodox role, are elusive—and have been known to head off disaster for the coin. “It can be very scary.”

www.wsj.com

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Hilary Allen

@ProfHilaryAllen

7 months

"like so many cos in the crypto industry, [FTX] propped itself up on an imaginary foundation of tokens it had invented, and that foundation was bound to fail eventually. When the next company in its position falls, the only surprise should be that ppl expected any other outcome"

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Hilary Allen

@ProfHilaryAllen

2 years

Is FTX really claiming that they have FDIC-insured brokerage accounts? The FDIC doesn't insure brokerage accounts.

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Hilary Allen

@ProfHilaryAllen

2 years

In 2008, we learned from CDS that infinite synthesis of financial assets allowed leverage to be multiplied, making the financial system more fragile. Here we go again.

official parody of David Golumbia

@dgolumbia

2 years

in #cryptocurrency "tokens, @ProfHilaryAllen sees an innovation that is at its core comparable to the credit default swap," the financial product that led to the 2008 Great Recession @maxwellstrachan #web3 #metaverse #blockchain #Ethereum #fraud

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Hilary Allen

@ProfHilaryAllen

10 months

First of all, does anyone really think that regulating the crypto markets is the most pressing financial or agricultural issue facing the American public? No. Instead, pressure for this legislation is coming from some venture capitalists, the crypto industry, and their lobbyists.

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Hilary Allen

@ProfHilaryAllen

2 years

From a financial stability perspective, banks should not be issuing stablecoins. Why would the government want to put its backing behind something that is only used for crypto speculation?

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Hilary Allen

@ProfHilaryAllen

10 months

As I’ve testified, it’s perfectly possible for blockchain-based businesses to comply with the securities laws, but the problem is that blockchain is not actually very good tech. So these businesses prob won't succeed on technological superiority.

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Hilary Allen

@ProfHilaryAllen

2 years

The most charitable reading is that Lummis and Gillibrand believe the hype about stablecoins being the future of money, but they're simply not fit for purpose. As the BIS recently noted "crypto cannot fulfil the social role of money"

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Hilary Allen

@ProfHilaryAllen

2 years

@SilvermanJacob I hope the Biden administration is paying attention to how this is hurting vulnerable members of our society...

The problems with Biden’s crypto executive order take us back to 2008

If we learned anything from 2008, it should be that not all financial innovation is good.

thehill.com

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Hilary Allen

@ProfHilaryAllen

2 years

Appreciate Gensler clearing up pervasive misunderstandings about stablecoins: Outside of use on crypto platforms, stablecoins generally are not used for commerce. U.S. retail investors have no direct right of redemption for the two largest stablecoins by market capitalization

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Hilary Allen

@ProfHilaryAllen

10 months

The digital asset market structure bill isn’t the only terrible piece of crypto legislation being rushed into markup tomorrow. There’s also a very flawed stablecoin bill as well.

Hilary Allen

@ProfHilaryAllen

10 months

Rs on House FS and Ag Cttees have dropped text of their digital asset market structure bill, which they’re rushing into markup next week. There are many reasons to pump the brakes on this bill, and I’ll discuss some in this thread. But first - what’s really driving the rush?

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Hilary Allen

@ProfHilaryAllen

2 years

Many crypto assets already qualify as securities, but the bill ties itself up in knots trying to create a bespoke regime for those assets that is lighter touch than securities regulation.

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Hilary Allen

@ProfHilaryAllen

10 months

So how does this industry profit? 1, assets can be made up out of thin air (often wash traded to pump up valuation) & then sold for profit. 2, exchanges engage in combinations of brokerage, exchange, clearing and proptrading activities (sometimes with commingled customer funds)

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Hilary Allen

@ProfHilaryAllen

1 year

Thanks to @ForeignAffairs for the opportunity to lay out the case for banning crypto

Kate Brannen

@K8brannen

1 year

"Some have expressed concerns about the United States losing its edge as a global leader in cryptocurrency innovation, but it is undesirable to be a leader in an innovation this harmful." @ProfHilaryAllen for @ForeignAffairs :

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Hilary Allen

@ProfHilaryAllen

2 years

If we are going to bring stablecoins within the banking system, at the very least they should be subject to the separations between banking and commerce imposed by the Bank Holding Company Act.

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Hilary Allen

@ProfHilaryAllen

2 years

And I haven't even gotten to the tax issues...

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Hilary Allen

@ProfHilaryAllen

4 months

Once again, the crypto industry is correctly diagnosing problems with the financial system BUT completely misrepresenting its ability to solve them. The claims in this report about potential speed/size/disintermediation are completely overstated. See

The Block

@TheBlock__

4 months

ICYMI: The State of Crypto: Fairer, Cheaper, Faster Everyday Finance- in partnership with Coinbase

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Hilary Allen

@ProfHilaryAllen

2 years

And here's your regular reminder that crypto is not disrupting Wall St, they're merging (and as I warned in , the integration of crypto and repo is THE "terrifying worst-case scenario").

FT Markets

@FTMarkets

2 years

Banks turn to blockchain in search for high-quality trading assets

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Hilary Allen

@ProfHilaryAllen

2 years

I'm saddened that this EO falls prey to techno-utopian notions that technology can solve deep-seated structural financial inclusion problems. Critical interrogation of crypto's actual utility is needed before promoting it

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Hilary Allen

@ProfHilaryAllen

10 months

The SEC simply wouldn’t allow this in the securities world (with good reason - these kinds of conflicts have led to harm time and time again) . So while the tech is not incompatible with the securities laws, many crypto BUSINESS MODELS are.

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Hilary Allen

@ProfHilaryAllen

2 years

To understand DeFi's problems, you need to understand the finance AND the tech. I unpack both in , but ultimately, I'm not a tech expert. That's why it's so great that some of the biggest names in tech have formally weighed in

Letter in Support of Responsible Fintech

Dear Members of Senate Finance Committee...

concerned.tech

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Hilary Allen

@ProfHilaryAllen

2 years

At one conference when I presented my paper explaining that DeFi is not decentralized, I was told by DeFi proponents to look into MakerDAO. I did, and it did not seem decentralized to me - now the FT has come to the same conclusion:

Cryptocurrency fallout delivers sharp kick to decentralised finance dreams

Some networks have reneged on commitments to arms-length management

www.ft.com

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Hilary Allen

@ProfHilaryAllen

2 years

The IMF's F&D magazine has published my short article The Superficial Allure of Crypto. It's a call to look under the hood of blockchain technology & appreciate that the negative externalities associated with this flawed tech cannot be justified

The Superficial Allure of Crypto

Cryptocurrencies can’t deliver their claimed benefits, and instead pose grave risks

www.imf.org

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Hilary Allen

@ProfHilaryAllen

1 year

So the HFSC stablecoin bill dropped. TL;DR, it won’t fix problems with stablecoins (which aren't used for payments anyway), but it will extend govt safety net to more firms.

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Hilary Allen

@ProfHilaryAllen

1 year

Also, "the only truly effective way to prevent runs and make stablecoins stable is to put a government guarantee behind them [but] It seems like a truly terrible idea to guarantee something that has no real use case other than facilitating crypto speculation."

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Hilary Allen

@ProfHilaryAllen

2 years

Otherwise we risk a fusion of large tech and finance, with tech giants becoming TBTF financial institutions. Section 605 seems to create a loophole in the BHCA for stablecoin issuers, though.

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Hilary Allen

@ProfHilaryAllen

2 years

An important reason why stablecoins shouldn’t be brought within the banking system. We’d get all the moral hazard, but without any productive investment to show for it.

Jon Sindreu

@jonsindreu

2 years

An issue I feel is underdiscussed : DeFi has all the flaws of traditional finance, yes, but on top of this it basically finances other crypto projects, not houses or factories anywhere. It is as if traditional banks only financed other banks (essentially ONE big credit risk).

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Hilary Allen

@ProfHilaryAllen

10 months

One problem we IDed with the draft bill is that it wouldn’t just give the crypto industry an accommodative regulatory regime , it would create opportunities for other kinds of securities to migrate into the same light touch regime, eviscerating the securities laws as we know them

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Hilary Allen

@ProfHilaryAllen

2 years

To improve financial inclusion, ppl need access to straightforward financial services. Technology promises the moon, but won't fix incentives for predatory behavior that can thrive with complex products. @ChrisOdinet and I urge the Biden Admin to look beyond the crypto hype

TheHillOpinion

@TheHillOpinion

2 years

The problems with Biden's crypto executive order take us back to 2008 Via @ChrisOdinet @ProfHilaryAllen

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Hilary Allen

@ProfHilaryAllen

1 year

As we watch USDC, I'm re-upping this: . The final sentence "Without VC funding, there’s a good chance that stablecoins would disappear — and that we’d all be a lot better off."

We’re asking the wrong questions about stablecoins

Real issue is whether these crypto assets should be allowed to exist at all

www.ft.com

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Hilary Allen

@ProfHilaryAllen

2 years

@EmilyStewartM @TheStalwart I'm all for enforcing existing securities/commodities regulation against crypto, but creating special crypto regulatory regimes is a recipe for disaster:

Beware the proposed US crypto regulation — it may be a Trojan horse

Creating a bespoke regime will inevitably become a route for traditional financiers to avoid their own tougher rules

www.ft.com

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Hilary Allen

@ProfHilaryAllen

2 years

Really good point. The run dynamics on stablecoins are a bit different from money market mutual funds because stablecoin holders often lack direct redemption rights from the issuer - most holders must go to a crypto exchange if they want to convert their Tether to fiat currency

Amy Castor

@ahcastor

2 years

Tether wrote a lengthy blog post explaining how stable and liquid it is and how it's honoring redemptions. Here's the thing: This is all complete B.S. because only a select few of its big customers can actually redeem USDT for $$ directly.

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Hilary Allen

@ProfHilaryAllen

1 year

Let me conclude by shouting “WHY ARE WE EVEN DOING THIS?” Everyone knows stablecoins aren’t currently being used for payments; the underlying tech doesn’t scale well for processing lots of transactions; the WEF found s/coins don’t do anything for financial inclusion…

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Hilary Allen

@ProfHilaryAllen

10 months

Blockchain tech can’t guarantee economic decentralization either – and even if it could, there would be no profit and so VCs wouldn’t be funding it. So blockchain won’t be delivering on that front either.

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Hilary Allen

@ProfHilaryAllen

2 years

My latest for the FT on the dangers of rushing into new crypto legislation:

Beware the proposed US crypto regulation — it may be a Trojan horse

Creating a bespoke regime will inevitably become a route for traditional financiers to avoid their own tougher rules

www.ft.com

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Hilary Allen

@ProfHilaryAllen

2 years

Section 808 requires some minimum cybersecurity standards, but what about testing the software for basic quality control/fitness for purpose? We do this for aviation software - we should do the same if our financial system is going to run on it.

DO-178C - Wikipedia

en.wikipedia.org

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Hilary Allen

@ProfHilaryAllen

2 years

A smaller point, but Section 701 is another example of techno-solutionism that could waste govt funds. Given the obvious limitations of distributed ledger technology ( again), why should regulators be forced to waste time trying to study ways to use it?

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Hilary Allen

@ProfHilaryAllen

2 years

Section 702 appears to be more about forcing the Fed to grant master accounts to the crypto industry - something that Lummis has been pushing for a long time.

Fed Chair Defends Blocking Wyoming Crypto Banks, Including Kraken - Decrypt

Why won't the Federal Reserve recognize Wyoming's new crypto banks? On Tuesday, Chair Jerome Powell offered some explanations

decrypt.co

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Hilary Allen

@ProfHilaryAllen

2 years

The regulatory sandbox stuff in Section 802 is highly problematic. As I've explored, state-based fintech sandboxes are likely to result in a race to the bottom - so let's not let them operate across state lines.

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Hilary Allen

@ProfHilaryAllen

2 years

Also, this Section 802 supplies a definition of "innovative" that just means new, and the Section encourages anything that is new. But what if new = bad for investors or financial stability?

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Hilary Allen

@ProfHilaryAllen

10 months

The industry would like to see crypto legitimized as an investment for retail AND large institutional players like 401k plans and pension funds. They also would like the blessing to keep running conflicted exchanges. And they would like it ASAP. Hence the rush on this bill.

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Hilary Allen

@ProfHilaryAllen

10 months

Even some in the VC world seem to be losing interest – AI is the shiny new thing. The crypto industry desperately needs (i) new investors, and (ii) the ability to continue its conflicted business models. That’s where this legislation comes in.

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Hilary Allen

@ProfHilaryAllen

2 years

If people need to be able to do this to protect themselves, I don't think crypto is the best way to go for "financial inclusion"...

Quit

@0xQuit

2 years

9a/ FUNNY BUSINESS The first functions I look at are `mint`, `transferFrom`, and `isApprovedForAll`. Take a look at the four screenshots below, and see if you can determine why I'd call them malicious. All are things I've seen in live contracts. Drop a comment if you need help.

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Hilary Allen

@ProfHilaryAllen

2 years

Fun fact: in , I talked about the systemic risks of BlackRock’s Aladdin in one chapter, and the systemic risks of crypto in another. Guess they should have been in the same chapter. Sigh.

Coinbase Stock Soars as the Exchange Forms Crypto Partnership With BlackRock

A partnership on institutional Bitcoin trading marks a push into crypto by the world's largest asset manager and an endorsement for the embattled exchange.

www.barrons.com

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Hilary Allen

@ProfHilaryAllen

2 years

There's also a weird inconsistency btwn Section 702 (“Congress finds that “Digital assets settle with finality in seconds and minutes”) and Section 503 which allows for ad hoc negotiations w/ customers to determine what constitutes settlement finality for digital assets.

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Hilary Allen

@ProfHilaryAllen

10 months

(Here’s the link to the OG paper on VC’s regulatory entrepreneurship strategy, and while we’re at it, also a link to a great new paper on “venture predation”).

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Hilary Allen

@ProfHilaryAllen

10 months

There’s much more not to like about this bill, but I’ll stop here. The status quo isn’t perfect, but it does a decent job of protecting US citizens, and the public would benefit if Congress supported – instead of undermining – the SEC’s investor protection efforts.

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Hilary Allen

@ProfHilaryAllen

1 month

And by us, I mean everybody but Circle and Coinbase – their USDC stablecoin will be the primary beneficiary of proposed stablecoin legislation. Although, there are a few parts of this particular hasty mishmash that might give even Circle/Coinbase pause.

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Hilary Allen

@ProfHilaryAllen

10 months

My latest in The Hill on a very dangerous provision in the proposed digital asset market structure bill: an innovation mandate for the SEC. In an attempt to accommodate the crypto industry, Republican legislators would gut the broader securities laws

The SEC should not sacrifice citizens on the altar of private sector innovation

How can the SEC meaningfully push back against investor harm if Congress requires it to nurture private sector innovation?

thehill.com

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Hilary Allen

@ProfHilaryAllen

10 months

Most of our critique still applies to this revised version. It is still unnecessarily complex, riddled with loopholes, will become outdated as soon as tech and business models evolve, and is predicated on the fantasy notion that governance can ever be decentralized at scale.

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Hilary Allen

@ProfHilaryAllen

2 years

I spoke to Bloomberg Crypto about the Lummis Gillibrand Bill. My assessment? Start over. (Also, this may be my favorite podcast I’ve ever done. @s_m_i is a fantastic interviewer).

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Hilary Allen

@ProfHilaryAllen

10 months

And then, going back to my point about eviscerating existing securities laws, there’s Section 504 that would give the SEC a new innovation mandate, and regulated industry a new cudgel to undermine the SEC. Here’s my op-ed on this issue.

The SEC should not sacrifice citizens on the altar of private sector innovation

How can the SEC meaningfully push back against investor harm if Congress requires it to nurture private sector innovation?

thehill.com

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Hilary Allen

@ProfHilaryAllen

1 year

Some things must be allowed to fail, but close calls (even kind-of-close calls) are v hard in the moment - especially when dealing w unpredictable panic transmission. That's why we have to keep some thing from being close calls. Let's start by keeping crypto & banking separate.

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Hilary Allen

@ProfHilaryAllen

1 month

The thing is, FDIC receivership only works if its lubricated by deposit insurance. So this bill is essentially promising FDIC support without charging for it.

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Hilary Allen

@ProfHilaryAllen

1 month

(As an aside, USDC was one of the greatest beneficiaries of govt support for SVB: it lost its $1 peg as SVB foundered, and it was only restored once US authorities agreed to make USDC and other uninsured SVB depositors whole. Stablecoins aren’t stable )

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Hilary Allen

@ProfHilaryAllen

10 months

The bill still doesn’t address the fact that blockchains are riddled with operational fragilities, and are not something you'd want to run a financial system on

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Hilary Allen

@ProfHilaryAllen

10 months

(And this comes at a time when even lots of people in the crypto industry admit that decentralization is aspirational rather than reality – so again, why are we rushing so fast to create a regulatory framework for it?)

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Hilary Allen

@ProfHilaryAllen

2 years

It's exciting to see my work on DeFi profiled in my hometown paper! Thanks for a great conversation, @domp

Ticking crypto time bomb could spark another financial crisis

Decentralised finance, also known as DeFi, is being touted as a better option to existing stuffy financial services. But it’s rife with unregulated middlemen.

www.smh.com.au

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Hilary Allen

@ProfHilaryAllen

4 months

It kind of boggles the mind that Coinbase is making these kinds of claims at the same time that it's trying to defeat the SEC in court by arguing its business is offering Beanie Babies, not transformational financial services

Cryptocurrency like Beanie Babies, says Coinbase in US regulator’s lawsuit

The Securities and Exchange Commission has alleged the crypto exchange is flouting rules and selling unregistered securities

www.theguardian.com

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Hilary Allen

@ProfHilaryAllen

1 year

Because right now, stablecoins aren't really used for payments. Let's call stablecoins what they are – a gateway to speculative investments, or poker chips, if you prefer – and regulate them as such.

John Paul Koning

@jp_koning

1 year

I wrote a quick post about payments stablecoins vs trading stablecoins.

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Hilary Allen

@ProfHilaryAllen

11 months

I just posted a new draft "Interest Rates, Venture Capital, and Financial Stability" In telling the stories of SVB & crypto, it highlights the VC industry’s unexpected and underappreciated contribution to financial stability threats in the early 2020s.

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Hilary Allen

@ProfHilaryAllen

10 months

Now to the specifics of the bill: if you want more detailed discussion of what was wrong with the earlier, draft version of this legislation, here’s the comment I authored with @Miercoles_Hays and @leereiners .

Statement of Opposition to HFSC’s Digital Asset Regulation Discussion Draft

The following letter was submitted to the House Financial Services Committee for inclusion in the record of a June 13, 2023, hearing titled: “The Future of Digital Assets: Providing Clarity for the…

sites.duke.edu

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Hilary Allen

@ProfHilaryAllen

2 years

Deposit insurance keeps banks stable so they can continue to fund productive enterprise (MMFs fund real corporations too). But stablecoins aren't used for anything other than betting in the DeFi casino. Why would the govt want to provide deposit insurance to stabilize them?

Brendan Pedersen

@BrendanPedersen

2 years

NEW: We got our hands on a discussion draft of congressional Democrat's first significant attempt to legislate stablecoins. We've uploaded the draft in its entirety here:

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Hilary Allen

@ProfHilaryAllen

1 year

My latest in the FT today - with an assist from Regina George!

Tony Tassell

@TonyTassell

1 year

"To paraphrase the character Regina George in the film Mean Girls, lawmakers should stop trying to make crypto happen." - FT column by @ProfHilaryAllen

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Hilary Allen

@ProfHilaryAllen

10 months

This problem arises because most financial assets are already in digital form, and the draft legislation said it would apply to any fungible digital asset whose ownership is recorded on a blockchain. But there’s nothing particularly special about a blockchain

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Hilary Allen

@ProfHilaryAllen

2 years

It was a pleasure to speak with Bloomberg about my paper on DeFi's parallels with mid-2000s era shadow banking. Paper here: Article here:

Crypto’s Unregulated DeFi Boom Raises Shadow Banking Comparisons

Many of the negative hallmarks of shadow banking -- such as the excessive leverage and opacity that precipitated the 2008 global financial crisis -- have already seeped into the world of decentrali...

www.bloomberg.com

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Hilary Allen

@ProfHilaryAllen

10 months

Instead of fighting over the Howey test for investment contracts, the SEC will be forced to fight over Reves v EY for “notes”, or Landreth Timber for “stock” as traditional securities issuers try to litigate their way out of these categories & into the new light touch regime.

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Hilary Allen

@ProfHilaryAllen

3 years

From my book: It's a bit like the Emperor’s New Clothes, w everyone afraid to admit that they can’t understand what’s so new and transformative about the innovation but w added financial incentives to keep going along with the story so that you can profit

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Hilary Allen

@ProfHilaryAllen

10 months

Despite blockchain’s limitations, I’m sure that many issuers of existing securities would be willing to put their assets on a blockchain if it meant they could avoid SEC regulation but still have their securities traded on a public exchange.

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Hilary Allen

@ProfHilaryAllen

2 years

In , I talk about many problems associated with financial institutions incorporating machine learning into their risk management models. @doctorow has one I missed - adversarial attacks on training data. Have to think about what this could mean for banks

Cory Doctorow NONCONSENSUAL BLUE TICK

@doctorow

2 years

But a burgeoning research field based on adversarial attacks on training data shows that we need to go beyond checking training data for bias. 10/

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Hilary Allen

@ProfHilaryAllen

2 years

Fidelity, Schwab, Citadel Securities Plan to Launch New Crypto Exchange

A consortium of financial heavyweights including electronic trading giant Citadel Securities and brokerages Fidelity Investments and Charles Schwab Corp. on Tuesday announced plans to launch a new...

www.wsj.com

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Hilary Allen

@ProfHilaryAllen

10 months

The SEC is still faced with unreasonable hurdles in rebutting people’s assertions that their digital assets live on decentralized blockchains and are therefore beyond the SEC’s jurisdiction.

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Hilary Allen

@ProfHilaryAllen

10 months

Kind of ironic that a bill supposed to provide certainty about investment contracts will open up a big can of uncertainty about other kinds of securities. If certainty were really the goal, the bill could specify that all digital assets on a blockchain count as securities.

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Hilary Allen

@ProfHilaryAllen

2 years

Concise but devastatingly comprehensive and effective, @Tonantzin_LC has written the seminal take-down of crypto's claims about promoting financial inclusion

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Hilary Allen

@ProfHilaryAllen

10 months

Cue the contracts of adhesion with waivers built in: Want to use the exchange? Then you’ll need to let us use your funds…

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Hilary Allen

@ProfHilaryAllen

10 months

(The new regime will be administered by the smaller and underfunded CFTC, rather than the SEC)

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Hilary Allen

@ProfHilaryAllen

1 month

And so like the house bill, this bill provides a way for big tech platforms to basically become unregulated banks with implicit guarantees of access to the Fed discount window and FDIC insurance. Do we really have bipartisan support for THAT?

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Hilary Allen

@ProfHilaryAllen

2 years

@ProfSautter I think that's an accurate depiction of recent crypto investing trends, but given that everyone who purchased Bitcoin since the end of 2020 is now underwater on their investment, I don't think that's something to celebrate. Viz @ChrisOdinet & me on predatory inclusion.

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Hilary Allen

@ProfHilaryAllen

2 years

Thanks to interdiscip twitter for cites/discussions @smdiehl @hackylawyER @Aarondklein @molly0xFFF @kwerb @el72champs @alexisgoldstein @moxie @SchrimpfAndreas @hwenqian @dgolumbia @tressiemcphd @BloombergME @JohnReedStark @paulkrugman @Edmund_Schuster @timoreilly @Prof_CarlaReyes

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Hilary Allen

@ProfHilaryAllen

2 years

It's terrible that so many are losing money in the FTX failure, but if you want to understand how it could have been so much worse if banks had exposure to crypto, check out the prologue of .

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