Douglas Arner et al on Datafying sustainable finance: Efficiency and impact by design (European Law Journal)

"Datafying sustainable finance: Efficiency and impact by design"
Dirk A. Zetzsche, Marian Unterstell, Ross P. Buckley, Douglas W. Arner
European Law Journal, Volume 31, Issue 3, pp. 203-226
Published online: November 2025

Abstract: The ongoing implementation of the EU's Sustainable Finance Strategy has led to a significant development of EU law to finance and facilitate the transition of the real economy towards sustainability. We argue first that this strategy, at its core, is a data strategy, requiring the datafication of the entire European financial, production and services sectors. The ongoing process of datafication will extend to data concerning externalities previously not incorporated into quantitative financial models and analysis. Second, we look at other datafication processes in finance to identify regulatory lessons for the EU's Sustainable Finance Framework in light of the European Commission's Simplification and Burden Reduction agenda in finance. We recommend the implementation of digital reporting standards developed in tandem by industry and regulators; the utilisation of Green RegTech and SupTech, centralised and enabled via digital reporting infrastructure; and the facilitation of the use of official estimates to both ensure proportionality and reduce the regulatory burden of reporting entities, with a focus on small and medium enterprises.

Douglas Arner et al on Building Digital Payment Ecosystems: Digital Financial Infrastructure, Financial Inclusion, and the UN Sustainable Development Goals (Cal W ILJ)

"Building Digital Payment Ecosystems: Digital Financial Infrastructure, Financial Inclusion, and the UN Sustainable Development Goals"
Douglas Arner, Sijuade Animashaun, Yixiao Cai, Kuzi Charamba
California Western International Law Journal, Volume 55, Number 1 (2024)
Published online: March 2025

Abstract: This article examines how digital payment innovation and supporting initiatives, such as infrastructure and regulation, can foster micro, small, and medium enterprise (MSME) access to finance. This expanded access in turn supports broader sustainable development as reflected in the United Nations Sustainable Development Goals (SDGs). Achieving these goals requires thoughtful consideration and management of technological and a range of other risks and impacts across jurisdictions and governance levels.

     Digital payment platforms serve as collectors, aggregators and (in some cases) providers of MSME financial and other data. This supports lending, low-cost agent-assisted financial transactions, financial products, and services by conventional banks, micro-finance institutions (MFIs), and non-bank financial institutions. Importantly, the data provided by these platforms can facilitate cash flow analysis and factoring (a form of alternative credit data) in which MSMEs use receivables as collateral (complementing other forms of collateral, such as real properties) to access finance within traditional lending institutions or elsewhere. 

   As consumer confidence in e-commerce platforms boosts the digital presence of MSMEs, new markets for MSMEs (particularly small retail shops, such as “mom-and-pop” stores providing last-mile services to unbanked and underserved segments in remote areas) emerges. Yet, there have been increasing concerns among policymakers and regulators at national, regional, and international levels......(Please click here to read the full text.)

Douglas Arner et al on Building Open Finance: From Policy to Infrastructure (Notre Dame Journal of International & Comparative Law)

"Building Open Finance: From Policy to Infrastructure"
Douglas Arner, Ross Buckley, Christine Wang, and Dirk Zetzsche
Notre Dame Journal of International & Comparative Law
Volume 15, Issue 1 (2025)
Published online: June 2025

Abstract: As one of the most digitalized sectors of the economy, finance is increasingly dependent on data. Over the past decade, the implementation of Open Banking and Open Finance in an increasing number of major jurisdictions around the world, including the European Union (EU), the United Kingdom (UK), Australia, Brazil, and the United Arab Emirates (UAE), seeks to break down data silos, empower consumers, and increase competition among financial service providers, aiming to maximize the value of financial data for innovation, growth, and competitiveness. In addition to mandatory requirements, other governance approaches to Open Finance, including collaborative arrangements and voluntary initiatives, are emerging. For example, Singapore and Hong Kong are actively supporting the development of Open Finance through collaboration between regulators and industry, while both China and India are seeking to develop new approaches to making data available to support development, innovation, and competitiveness. In the United States (US), industry associations have promoted Open Finance practices, and a new mandatory rule from the Consumer Financial Protection Bureau (CFPB) on personal financial data rights is currently pending.

There are complex problems in the interaction between financial regulation and data governance in Open Finance. Customer data shared through an Open Finance system is both subject to financial regulatory requirements, such as rules governing the collection, processing, and use of financial data, and to the general governance framework for data protection. Furthermore, Open Finance initiatives adopted by different jurisdictions affect information sharing in domestic financial markets and in the cross-border transfer of financial data. The trend towards data localization and the asymmetry of data sharing leads to an unlevel playing field between market players, thereby exacerbating the problem of regulatory fragmentation in Open Finance regimes. Given the evolving nature of digital finance and the complexity of integrating data into its process, the main challenge is to develop appropriate governance approaches that can maximize the benefits of data sharing while mitigating new cross-cutting challenges in finance and data regulation.

Based on an analysis of experiences to date in leading jurisdictions, we synthesize a range of policy strategies to address the complex interplay of financial regulation and data governance inherent in building Open Finance. These hold important lessons also for the US as it moves forward. The multi-disciplinary nature of Open Finance requires coordination between regulators and industry to ensure policy coherence and technical interoperability. Where financial and data regulatory regimes intersect, it is important to establish a collaborative forum and/or provide general guidance to facilitate a better understanding of Open Finance governance and improve consistency in regulatory action across sectors. In response to the increasing digitalization of the economy, there is also the need to expand the scope of data sharing from the financial sector to other industries, and thus move towards a broader Open Data framework.

Douglas Arner et al on Centralization in Decentralized Finance: Systemic Risk in the Crypto Ecosystem and Crypto’s Future as a Regulated Industry (Law and Contemporary Problems)

"Centralization in Decentralized Finance: Systemic Risk in the Crypto Ecosystem and Crypto’s Future as a Regulated Industry"
Douglas W Arner, Tanvi Ratna, Sijuade Animashaun, Jatin Bedi, Naveen Mishra
Law and Contemporary Problems, Volume 87, Number 2 (2025), pp. 185 - 210
Published online: April 2025

Introduction: A paradigm shift is manifesting in the global crypto ecosystem. Akin to traditional financial systems, crypto markets have developed networks of complex interrelationships between infrastructures, intermediaries and market participants. As an example, the events of the so-called “Crypto Winter” of 2022-2023, which began in early 2022 with the crash of sister tokens USDTerra and Luna and resulted in a series of cascading failures and collapses including that of the major crypto conglomerate FTX, underscore the significant potential that interconnection, interdependencies, concentration and contagion have in the evolving ecosystem. Compared to traditional finance, which is underpinned by a wide range of regulatory and supervisory interventions of central banks and other international and domestic regulatory bodies, the crypto ecosystem has until recently remained largely unregulated. This however is changing rapidly in major economies around the world and is expected to change as well in the United States, as crypto increasingly becomes a regulated industry. 

The crypto ecosystem is typically described as and characterized by decentralization and disintermediation. We have seen a range of situations however where the system does not operate in this way......

(click here to view full article)

Lucien J. van Romburg on Digital Finance and Regulatory Competition: Regulating Distributed Ledger Technology-Based Financial Products and Services (Wolters Kluwer)

Digital Finance and Regulatory Competition: Regulating Distributed Ledger Technology-Based Financial Products and Services
Lucien J. van Romburg (PhD 2023)
Wolters Kluwer
Publication date: 18 November 2024

Overview: This is a book addressing the question of whether the world’s leading financial centres – Hong Kong, London, and New York – engaged in regulatory competition with one another through their formulation of the rules to govern distributed ledger technology (DLT)-based financial products and services in their respective jurisdictions during the period 2008-2022. In light of this, the book furnishes a clear and cohesive framework to understand the influence of regulatory competition in the world’s major financial centres, utilising a narrative lens built on a comparative study of legal, regulatory, and policy instruments. The outcome is an exhaustive and thought-provoking analysis which distils observations regarding the regulation of DLT-based financial products and services and the potential implications for the future regulation of other novel technologies in the financial services industry.

More details are available here.

Douglas Arner and Christine Wang on Bigtechs and the Emergence of New Systemically Important Financial Institutions: Lessons from the Chinese Experience (EILR)

"Bigtechs and the Emergence of New Systemically Important Financial Institutions: Lessons from the Chinese Experience"
Christine M. Wang, Douglas W. Arner
Emory International Law Review (Vol. 39,  Iss. 1 (2024))
Published online: December 2024

Abstract: Over the past two decades, the emergence of giant technology firms (Bigtechs) has disrupted the traditional way that financial markets operate. These technology giants have leveraged network effects, massive amounts of data, and extensive customer bases to expand into the financial sector and rapidly achieve economies of scale and scope. The expansion of Bigtechs into finance has reinforced the pre-existing trends of digitalization and datafication in finance, which has evolved into a new era of the platformization. With a substantial presence in financial markets, the development of digital finance platforms has enormous potential for enhancing financial inclusion, efficiency and sustainable development. Despite these benefits, there are also many issues and risks in relation to their involvement in financial services, such as the emergence of new “too-big-to-fail” and “too-connected-to-fail” problems and the development of new systemically important financial institutions (SIFIs). In this context, the question is how policymakers and regulators, along with industry and consumers, can effectively leverage the benefits of the platformization of finance while mitigating its risks and negative impacts.

This article focuses on the experience and lessons learned from China, in particular, as it has been a pioneer in the platformization of finance. As the potential problems arising from Bigtechs’ market dominance and economies of scale have become increasingly prominent, they have become the focus of a multi-pronged response from the Chinese government, particularly from the second half of 2020. In the context of digital finance, risks involved in platform-based and highly interconnected financial activities are being addressed via multiple areas of law, including finance, competition and antitrust, data protection and cybersecurity. Based on the Chinese experience, the broad cross-sectoral and rapidly evolving nature of Bigtech businesses requires a reconsideration of the complex interaction between different government policies and regulatory objectives.

Drawing from the lessons of China’s experience, this article frames a number of strategies and recommendations for other jurisdictions that are exploring ways to regulate the emergence of the platformization of finance. Firstly, due to the rapidly evolving nature of Bigtech businesses, it is important to develop regulatory mechanisms that allow for timely review and adaptation to facilitate understanding of innovative financial services before risk events occur. Secondly, the exclusive control of customer data by Bigtechs is likely to undermine competition in financial markets, thus requiring effective data sharing mechanisms, such as Open Finance initiatives, to break data monopolies. Furthermore, given their combination of network effects and economics of scope and scale, digital finance platforms are in increasing cases becoming systemically important. There is a need for both activity-based and entity-based regulations to address risks involved in the interconnected financial businesses of these new SIFIs.

Douglas Arner et al on Monetary Hegemony: Technological Evolution and the International Monetary System (ILJ)

"Monetary Hegemony: Technological Evolution and the International Monetary System"
Douglas W. Arner, Ross P. Buckley, Dirk A. Zetzsche, and Anton N. Didenko
Boston University International Law Journal, ILJ 42.2 — Summer 2024
Published online: October 2024

Abstract: In this article, we analyze the evolution of the international monetary system. Today’s system is built around the US dollar as the core international monetary instrument, supported by a range of international institutions (in particular the International Monetary Fund and the Bank for International Settlements) and domestic and cross-border payment systems, some public, some private, some mixed. The foundation of this system are major central banks, in particular the US Federal Reserve, responsible for US dollar issuance, and with a twin mandate for both monetary stability and economic growth along with financial stability, all backed by a range of regulatory mandates focusing on payments infrastructure and finance. This system, established after World War II as the Bretton Woods international monetary system, has evolved from one based fundamentally on gold and physical payment and financial arrangements, to one—particularly following the end of the Bretton Woods system of currencies fixed to the US dollar and the evolution of a floating exchange rate system from the early 1970s—based on digital systems, with the approximately $7.5 trillion of foreign exchange transactions each day almost entirely digital. This system however has been subject to criticism almost since its inception, with continual calls to reduce the international monetary hegemony of the US dollar. Over the past fifteen years, since the 2008 Global Financial Crisis weakened confidence in the US-led international monetary and financial order, criticisms and calls for reform have become increasingly common globally. In this Article, we highlight two aspects of international monetary evolution which have been under-addressed: the role of technology and the role of law. Following a discussion of the evolution of the international monetary system focusing in particular on the interaction of monetary hegemony, technological evolution and the role of legal arrangements (public, private, domestic, international), we turn to our central thesis: a technological revolution in monetary and payments systems is introducing alternatives and competitors to the existing international monetary regime based on the US dollar and offers the opportunity to build an improved international system, a system which, for the first time, may not be based on a single dominant monetary instrument. We bring these various elements together to consider a range of scenarios for the future of the international monetary system, highlighting in particular new initiatives from the IMF and BIS which could serve as the basis of new international multicurrency payment arrangements. We analyze the new technologies which could underpin such a new system and the possible role of a Digital Dollar. We conclude that the geopolitics of a multipolar world coupled to the evolution of enabling technologies may well result in a small number of major economy central bank digital currencies and currency areas, eliminating the historical pattern of monetary hegemony. There is a clear need to redesign systems to support international monetary and payment arrangements as a public good, and we explore how this might be achieved.

Douglas Arner et al on The financialisation of Crypto: Designing an international regulatory consensus (CLSR)

"The financialisation of Crypto: Designing an international regulatory consensus"
Douglas Arner, Dirk A Zetzsche, Ross P Buckley, Jamieson M Kirkwood
Computer Law and Security Review, Volume 53
Published online: May 2024

Abstract: Bitcoin was presented in 2008 as a technology-driven alternative to the weaknesses of the traditional monetary, payment and financial systems dramatically highlighted by the Global Financial Crisis of 2008. The underlying technology – blockchain and distributed ledger technology – was posed as a technological solution to the problems of trust, confidence, transparency and behaviour traditionally addressed in finance through a framework of law, regulation and institutions (including markets and the state). Cryptocurrencies, blockchain, distributed ledger technology and decentralised finance were designed to address the weaknesses and risks in traditional finance. Yet fifteen years of evolution culminating in the Crypto Winter of 2022–23 have demonstrated that crypto is neither special nor immune and has come to feature all the classic problems of traditional finance. As the crypto ecosystem has evolved, the market failures and externalities of traditional finance have emerged – a process we term the ‘financialisation’ of crypto. These include conflicts of interests, information asymmetries, centralisation and interconnections, over-enthusiastic market participants, plus agency, operational and financial risks. We argue that (a) in order to develop successfully going forward, the crypto ecosystem needs to assimilate the centuries of experience of underpinning traditional finance with law and regulation, and (b) in the aftermath of the Crypto Winter, an international consensus is crystalising in respect of the regulation of the crypto ecosystem. We argue regulatory systems are now being instituted to ensure the proper functioning of crypto and its interconnections with traditional finance. The lessons of the financialisation of crypto also apply more broadly: appropriately designed regulatory systems are central to financial market functioning and development.

Giuliano Castellano on Don’t Call It a Failure: Systemic Risk Governance for Complex Financial Systems (LSI)

"Don’t Call It a Failure: Systemic Risk Governance for Complex Financial Systems"
Giuliano Castellano
Law & Social Inquiry (First View, pp. 1-42)
Published online: March 2024

Abstract: The probability that an event will avalanche into an impairment of essential services constitutes a “systemic risk.” Owing to the inherent complexities of modern societies, the outbreak of a novel disease or the failure of a financial institution can rapidly escalate into an impact significantly larger than the initial event. Through the lens of complex system theory, this article draws a parallel between financial crises and disasters to contend that the regulatory framework for financial systemic risk is unequipped to address its fundamental dynamics. Epitomized by the market failure rationale, financial regulation is premised on a reductionist view that purports both systemic risk and law as external to the actions of market participants. Conversely, this article advances a twofold conceptual framework. First, it shows that systemic risk emerges from the same complex dynamics that generate the financial system. Second, it understands law as an agent of complexity, thus contributing to the emergence of finance and its inherent instability. Normatively, this conceptual framework reveals the limits of current regulatory approaches and constructs a holistic risk governance framework that is akin to the one adopted to govern disaster risks.

Julien Chaisse & Jamieson Kirkwood on Tokenised Funding and Initial Litigation Offerings: the New Kids Putting Third-party Funding on the Block (Law and Financial Markets Review)

"Tokenised funding and initial litigation offerings: the new kids putting third-party funding on the block"

Julien Chaisse & Jamieson Kirkwood

Law and Financial Markets Review 
Published in December 2022 online

pp.1-23
https://doi.org/10.1080/17521440.2022.2153609

Abstract: This article presents a critical assessment of how blockchain technology is disrupting the monetisation of litigation claims through tokenization – and consequently further shaking up a revolutionary area in litigation financing. The significance in litigation financing is chiefly because tokenization presents securities to the general public in a far more accessible way than was previously the case – and even might enable non-accredited investors to participate in certain litigation financing investments for the first time (or with reduced barriers to entry). The assessment also considers the implications of a litigation pool that was already growing towards USD 20 billion, potentially now getting even larger. We further consider the regulatory challenges and the new moral hazards created in this fast-moving space.