Institute Insights: National Fintech Day

Wednesday, August 14, 2019

By Eric Ghysels, Rethinc. Labs Faculty Director, Edward Bernstein Distinguished Professor of Economics at UNC-Chapel Hill and Professor of Finance at UNC Kenan-Flagler Business School

National Fintech Day is the perfect occasion to report on the activities at the Kenan Institute and Kenan-Flagler Business School. Like many business schools around the country and the world, we are adding new courses to the curriculum and upgrading existing ones at the undergraduate, MBA and Ph.D. levels. Because the University of North Carolina at Chapel Hill is part of Ripple’s University Blockchain Research Initiative, we’re also thrilled to participate in the program’s first annual network event in early October at the University of California, Berkeley. One of our new assistant professors of finance, Donghwa Shin, will present his latest research on cryptocurrency markets.

I’m also excited about two other initiatives specific to Chapel Hill and, more broadly, the Research Triangle.

First is Lt. Gov. Dan Forest’s North Carolina Blockchain Initiative to study the unique attributes and use cases of blockchain technology, virtual assets, smart contracts and digital tokens. This initiative will develop a series of recommendations that promote opportunities for economic growth and cost efficiencies, and will aim to strengthen North Carolina as a leader in technological innovation. Members of the work group include industry leaders, as well as two academics – my colleague, Campbell Harvey, from Duke University’s Fuqua Business School, and me. I applaud the initiative from the lieutenant governor, who hopes to deliver a strategy to the North Carolina General Assembly, Department of Insurance, Department of the State Treasurer and other state agencies that will increase awareness, streamline regulatory oversight and modernize state government. The initiative fits in precisely with the Kenan Institute’s mission to develop and promote innovative, market-based solutions to vital economic issues, bringing together high-profile business leaders, academic researchers and policymakers.

The lieutenant governor has noted that North Carolina was among the earliest pioneers in the regulatory development of blockchain-based technologies, with the passage of the North Carolina Money Transmitters Act of 2016 (HB 289). The act updated the state’s existing laws to include a defined “virtual currency” term, and clarified which activities using virtual currency trigger licensure under the act. This ensured exemptions for virtual currency miners and blockchain software providers, including smart contracts platforms, colored coins, smart property, multi-signature software and non-hosted, non-custodial wallets. The passage of After 16 months of deliberations between the Office of the Commissioner of Banks, the General Assembly and the Chamber of Digital Commerce, House Bill 289 marked a historical moment for the regulation of blockchain technology at the state level. Its passage was considered a turning point in the history of blockchain regulation in the United States, paving a path for other states to pass responsible legislative initiatives nationwide.

The North Carolina Blockchain Initiative will be co-chaired by Faruk Okcetin of the North Carolina Digital Economy Hub, Daniel Spuller of the Chamber of Digital Commerce and Eric Porper of the Warp Institute. For Updates and submissions please visit The North Carolina Blockchain Initiative.

The second initiative I’d like to discuss involves quantum computing. Quantum computing is the use of quantum-mechanical phenomena, such as superposition and entanglement, to perform computation. It is a paradigm shift in computer science, moving away from so-called classical – or digital – computers. While the field is still experimental, recent advances have made it possible to put this new technology to practical use. Governments, established companies and startups are increasingly investing in quantum computing. Many applications pertain to the financial sector, such as cryptography, machine learning, portfolio allocation and derivative pricing, among others. Quantum computing is expected to have a major impact on the financial industry in the future, and many are concerned about quantum readiness. Quantum supremacy, the point at which a quantum computer will solve a computational problem that a classical computer can’t handle, is expected by many to happen either this year or next.

The Research Triangle hosts the only North American quantum computing Q Hub at North Carolina State University, which is part of the IBM Q Network. We have been collaborating with our colleagues at NCSU on various potential fintech applications, and I’m happy to announce that the Kenan Institute and the Q Hub will host a joint quantum fintech symposium on April 15, 2020. Mark your calendar!