This presentation by Gary Gensler, Senior Advisor to the Director, MIT Media Lab and Senior Lecturer, MIT Sloan of Management and former Chair, US Commodity Future Trading Commission took place at the Workshop on Digital Financial Assets at the OECD in Paris on 16 May 2018. Find out more at http://www.oecd.org/finance/2018-workshop-digital-financial-assets.htm

1. Crypto Finance
Gary Gensler , Senior Advisor to the Director,
MIT Media Lab and Senior Lecturer,
MIT Sloan School of Management
OECD WORKSHOP ON DIGITAL FINANCIAL ASSETS
16 May 2018 - Paris, France

3. Public Policy Framework
•Guarding Against Illicit Activity
•Financial Stability
•Protecting the Investing Public

5. Initial Coin Offerings - Crowdfunding
• Tokens Facilitate both Investment & Consumption
• Fungible & Transferable
• Generally Issued Prior to Use on a Functioning Network
• Promoters Allocated Premined Tokens
• Scarcity Fostered with Preset Monetary Policy
• Development, while Open Source, is Largely Centralized
• Purchasers Anticipate Profits
• Significant Fraud and Scams – Est. of 25% or as high as 81%
• Most Issued Outside of Investor Protection Laws

6. Exchange
s
Source: Chris McCann Medium Post

7. Crypto Exchanges
• Centralized - Matching Agents, Counterparties & Custodians
• Decentralized - Networks for Peer-to-peer Trading
• Have over 30 Million direct Members - Lack Intermediated Access
• Significant Losses due to Hacks
• Lack Meaningful Investor Protection or Market Integrity Rules

8. Global Approach
• Growing Consensus on
• Guarding Against Illicit Activities
• Monitoring for Stability
• Must do More, though, to Protect Investors
• FSB, BIS, IOSCO & IO’s Debating & Making Recommendations
• At least 40 Countries Have Spoken on ICOs & Exchanges
• Japan, U.S., & Others Moving to Regulate Exchanges
• U.S., in particular, seeking to bring ICOs within Securities Laws

9. Path Forward:
Challenges Ahead
• Remediation of Legacy ICOs & Exchanges
• Custodial Arrangements
• Tracking Beneficial Ownership
• Decentralized Exchanges
• Adapting Existing Regulations
• Staying Abreast of Technology
• International Regulatory Arbitrage

10. Conclusions
• Blockchain Technology has Potential to Transform Financial Sector
• Addressing Technical & Commercial challenges could lower Costs, Risks
and Economic Rents
• Broad Adoption Requires coming within Public Policy Framework
• Public Confidence Can Only be Built on Consumer & Investor Protection
• Public, Blockchain Technology & Finance Will Reap Benefit