Brooklyn Law Fintech Panel Examines Risks, Opportunities in Cryptocurrency


Recently-confirmed SEC Commissioner Jaime Lizárraga expressed a mix of caution about cryptocurrency’s risks and hope that it could in the future exist in a compatible way within the framework of federal securities law during a keynote speech at a packed Brooklyn Law School symposium on fintech, cryptocurrency, and the law.  

In his Nov. 16 address to students, alumni, faculty and industry professionals, Lizárraga described the emergence of cryptocurrency and the rapid growth the industry has faced in recent years. Without naming the cryptocurrency exchange FTX, he alluded to the recent turmoil spurred by the sudden collapse of the company, which filed for bankruptcy just days before his speech, on Nov. 11, after a nearly $8 billion run on deposits.

Lizárraga pointed to various risks facing the cryptocurrency space, including–as federal regulators examining digital asset markets have found– increasing levels of fraud, a lack of transparency, and market volatility. The commissioner also questioned the accuracy of a common narrative that blockchain can provide financial access to low-income and underserved communities “that the traditional financial system has left behind,” such as the unbanked.

“Does it offer genuine financial inclusivity and robust protections for digital asset purchasers and investors? In my opinion, as of now, and despite the best intentions of many, the answer is no,” he said.

Despite his cautionary remarks, Lizárraga ended his remarks on a hopeful note: “Innovative blockchain technology can exist side-by-side and be compatible with the existing federal securities law framework,” he said. “The current moment offers an opportunity to make a meaningful difference for the success of blockchain technology and, possibly, for the financial future of millions. But it requires a good-faith, honest, and conscious choice to comply with the law and to put the interests of investors first.

Read the transcript of his full speech.

After his remarks, Lizárraga departed the event to return to Washington D.C., turning the microphone over to Jonathan Askin, Professor of Clinical Law at Brooklyn Law School. Before introducing the panelists, Askin spoke about the future of the cryptocurrency and fintech space—asserting that new lawyers will be the ones to craft the legislation that will ultimately guide the field.   

“I want to say to all of you coming into the profession that we are living through a revolutionary inflection point like we’ve never seen before,” Askin said. “I can think of maybe four or five times in U.S. history in which young lawyers have this rare opportunity to leapfrog into and disrupt a profession that otherwise was controlled by the old folks down there on Wall Street who are running scared from blockchain and crypto.”  

“Rules are going to be written, and they’re either going to be written by us—who are well informed and educated, with good public policy instincts—or they’re going to be written by people who know nothing. Which is the world that we want to see?” 

Panelists included Michelle Gitlitz ’04, general counsel for digital payments firm Flexa; Joshua Ashley Klayman, U.S. head of fintech and head of blockchain and digital assets for law firm Linklaters; and Cassie Lentchner, board member for digital asset platform BitGo. The panel was moderated by Peter Scoolidge ’08, general counsel for blockchain payments platform Keeta.  

The wide-ranging discussion that followed took on various issues concerning the world of fintech and cryptocurrency. The current lack of regulatory clarity on how different cryptocurrency assets are classified—whether as securities or commodities—was a common thread touched upon by all of the panelists over the course of the discussion.  

Gitlitz stressed the importance of understanding the technologies underlying blockchain and cryptocurrency, and how that understanding could be used to inform both practice and regulation. 

“When you really understand how the technology works, it can be really useful, even if you’ve not been practicing law for that many years,” Gitlitz said. “And I agree with Professor Askin that when all of this shakes out and you’re trying to define what is a ‘crypto asset security’ and ‘what is a digital commodity,’ It’s the people in this room who are going to have the most understanding of where the chips should fall.” 

Other points of conversation included ongoing and widely-watched litigation impacting the industry, such as the SEC v. Ripple case; the likelihood of future regulation; the importance of complying with anti-money laundering (AML) and Know Your Customer (KYC) regulations; and more. 

An audience Q&A wrapped up the discussion, which was followed by a reception.