U.S. Rep. Mike Flood, R-Neb., addresses a crowd at his “Flyover Fintech” conference at the University of Nebraska-Lincoln on Wednesday. (Aaron Sanderford/Nebraska Examiner)
LINCOLN — Leaders in the next phase of finance spent much of a technology conference Wednesday in Nebraska describing the need for sensible federal regulation that strengthens the guardrails for cryptocurrency and blockchain customers without stifling business innovation.
U.S. Rep. Mike Flood, R-Neb., a rookie member of the U.S. House Financial Services Committee, hosted a “Flyover Fintech” forum for 250 people in business, government and academia at the University of Nebraska-Lincoln College of Business.
Attendees included University of Nebraska President Ted Carter, Nebraska Bankers Association President Richard Baier, founders of local financial technology startups and several members of the Nebraska Legislature’s Banking, Commerce and Insurance Committee.
“I see fintech as an opportunity to create wealth and jobs in Nebraska,” Flood told the crowd. “I see fintech as an evergreen area of the law where we are literally shaping how this sector is going to move forward … for the entire world.”
Panelists, including Lydia Chiu of digital asset firm Ava Labs and Justin Slaughter of crypto technology investment firm Paradigm, described a moment of opportunity as people realize they can own their own data and digital assets.
Cryptocurrency and blockchain experts described a financial future less dependent on cash and credit cards, in which the buyers and sellers of real-world goods, digital items and digital services can send and receive payments faster.
A tool to rethink finance
U.S. Rep. French Hill, R-Ark., who chairs the House Subcommittee on Digital Assets, Financial Technology and Inclusion, described the shift toward digital currency as the newest financial tool causing people to rethink global finance and its functions.
Hill compared the disruption of cryptocurrency and blockchain to when ATMs first became ubiquitous. He said people and businesses are about to get “easy and cheap instant access” to their money and assets via digital wallets, a step he called revolutionary.
Flood called the early 2020s an echo of the mid-1990s. That’s when people were getting used to the internet and didn’t use email much for business or do much of their shopping online. Personal checks are the snail mail of today, he said.
Popular online payment company Venmo is a modern pioneer in the consumer payment space that will be viewed much like America Online was, he said, as the online leader of its day.
“These younger folks, they only know their cell phone, and they are going to lead the way with innovation that’s going to change the way we do business,” Flood said of global finance. “And it’s going to make it faster and more efficient.”
Need for fraud protection
Several speakers, including Flood and Nebraska Lt. Gov. Joe Kelly, a former criminal prosecutor, spoke about the need to boost protections for the public from fraud. A number of speakers referenced the 2022 collapse of the cryptocurrency exchange FTX.
The idea of cryptocurrency and other digital assets is to remove middlemen from financial transactions. This push is driven by the belief in some tech circles that governments and legacy currency and add unnecessary costs and hurdles to financial transactions.
Blockchain can be considered a digital ledger of these peer-to-peer transactions. The ledger is kept in chronological order and shared among participants in the purchases. It is meant to provide a lasting and transparent record.
Making payments this way can be cheaper than paying the processing fees, currency exchange fees and money wiring fees to complete purchases across international borders, crypto advocates explained. But it can also be riskier, some said.
The challenge, several speakers said, is making sure that legal protections for investors and customers that were designed for stocks, bonds and banks are properly calibrated to handle modern financial transactions and the rise of artificial intelligence.
The upside is a chance to make finance quicker and nimbler, panelists said, including Jared Favole of peer-to-peer payment company Circle and Tom Manatos of Block, formerly called Square.
Hill told those attending that business leaders in states such as Nebraska are already creating the infrastructure needed to grow a competitive financial technology sector. The state saw $300 million in venture capital in 2021, he said.
“San Francisco, Boston and New York are not the only places with good ideas,” Hill said. “There is so much money seeking good ideas they will come to where the talent is. … That attracts younger people to your communities.”
Several speakers credited Nebraska for being the second state, after Wyoming, to provide a framework in state law for digital assets and digital currencies. A group of young startup leaders said they can reach state banking officials in a single call.
State Sen. Eliot Bostar of Lincoln, a member of the Legislature’s Banking Committee, hosted one of the panels. He said Wednesday was just the latest step in the financial industry “moving forward, as it always is and it always has.”
“There was a time where hard currency cash and coin was all anyone had available to them,” Bostar said. “And you imagine at that point in time trying to envision a world where you swipe a card and money is exchanged digitally through bank accounts and wire transfers, and that would have seemed like magic.
“I think that’s where we are now, as well. We are all used to that system, and this next iteration, this next evolution of financial technology, seems like magic.”
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