Regulatory Concerns: Episode 47 – The Biggest Bank Robbery in History Is Coming with Linda Jeng | Thomas Fox – compliance evangelist

Linda Jeng is a digital economy leader and strategist with over two decades of experience in FinTech, policy and regulation. She is the founder and CEO of Digital Self Labs, a Web3 consulting firm based in Washington, DC. Digital Self Labs is an interdisciplinary consultancy combining blockchain software expertise with regulatory policy and strategy.

Linda helps clients design and implement innovative solutions that empower individuals and enable interoperability, transparency and efficiency in the financial and digital sectors.

He is also a renowned scholar and educator, working with the Georgetown University Law Center, Duke University School of Law, and the Bank for International Settlements. He conducts cutting-edge research and teaches courses on open banking, digital identity and decentralized finance (DeFi). and is the author of several publications and co-author of influential books on these topics. He is a frequent media speaker, commentator and contributor to Forbes. Linda holds a Juris Doctorate from Columbia Law School and a Masters in EU and International Law from the University of Toulouse Capitole. He speaks Mandarin Chinese, French and basic German.

In this episode of Regulatory Ramblings, he talks with host Ajay Shamdasani about an article he wrote and published by Coindesk titled “The Biggest Bank Robbery in History Is Coming.”

The premise and focus of the discussion is that regulators allow banks to tokenize financial assets such as bank deposits, US Treasuries and corporate debt. However, they want institutions to use authorized networks rather than decentralized blockchains that protect assets from hackers.

As Linda stated in her article: “In February, the Office of the Comptroller of Acting Chief Currency Officer Michael Hsu announced plans for new operational resilience rules for large banks with critical businesses, including third-party service providers. Crucially, what was not discussed was that the rules would “treat the use of permissive networks by large banks to tokenize real assets and liabilities, an omission that ignores critical new vulnerabilities in the global financial system.”

A key theme of the conversation is that encouraging permissioned networks to use permissionless blockchains will inevitably lead to cybersecurity attacks “on a scale previously unknown as the financial system moves to tokenize trillions of dollars of real-world assets and liabilities.” The biggest bank robbery in history is coming.”

“In contrast, the most effective cryptocurrency hacks typically involve centralized protocols, where hackers only need to hack the admin keys of one or a few actors to gain control and steal digital assets. Similarly, permissioned networks are controlled by only a few parties, making them more easily hacked than blockchains maintained by thousands of validators. “Concentrating attack vectors in large banks that control these licensed networks (or central banks that control non-blockchain ledgers) is like sticking targets on your back,” she said.

Linda talks about how she got into the legal profession, what drew her to digital assets as a scientist, and why she thinks the worst attacks on banks are yet to come.

Podcast discussion

3:51 The journey of a family rebel who empowers himself and his community

12:34 Taking up the challenge of understanding the causes of the 2008 financial crisis

17:23 The Dodd-Frank Act is still in force

21:36 The role of Big Tech in the financial system is an important issue

22:43 Fractional reserve banking: CBDC and Stablecoins, the project is crucial

24:37 The nature of money is changing – exciting times in FinTech

27:22 Tokenized real-world assets need to reside in the most resilient system possible

31:21 Advantage of permissionless systems over permissioned systems

33:27 Seeing similarities between technology and law: working in an interdisciplinary way

37:28 Lawyers should have a seat at the product design table

38:42 Biggest regulatory challenge: lack of understanding of the benefits of decentralization

40:40 Autonomy: Why web3 matters

42:09 The future network should restore personal control over identity and resources

45:01 Taking away our rights from Big Techs

48:42 It’s an exciting time to study law because technology is fundamentally changing most things

50:41 Artificial intelligence, Google search and new tools: the need to change the way we research and write

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