Legal Seminar, Denver, CO

071018 Discussion Draft

B. Regulation Highlights. ..................................................................................................... 9 1. ACH System................................................................................................................. 9 2. Wire Transfers. ........................................................................................................... 10 3. Payment Cards. ........................................................................................................... 10 C. Economic Incentives. ..................................................................................................... 11 1. Consumer side. ........................................................................................................... 12 2. Merchant side. ............................................................................................................ 12 3. What’s Not to Like? ................................................................................................... 12 IV. Innovators: Conventional “Rails”. .................................................................................... 13 A. Cost Innovators .............................................................................................................. 13 1. ACH Systems. ............................................................................................................ 13 2. Credit Card systems.................................................................................................... 15 B. Mobile Payments............................................................................................................ 16 1. Technology overview. ................................................................................................ 16 2. Convenience. .............................................................................................................. 16 3. Costs. .......................................................................................................................... 16 C. Embedded payments. ..................................................................................................... 17 1. “Contextual Commerce”............................................................................................. 17 2. “Internet of Things”.................................................................................................... 17 V. Innovators: Cryptocurrencies and DLT. .............................................................................. 17 A. Overview – Major Cryptocurrencies.............................................................................. 18 B. Missing Link. ................................................................................................................. 18 C. Advantages/Disadvantages of Cryptocurrencies............................................................ 18 1. Pseudo-anonymity. ..................................................................................................... 18 2. Peer-to-Peer. ............................................................................................................... 18 3. Security. ...................................................................................................................... 19 4. Finality........................................................................................................................ 19 5. Transaction Costs. ...................................................................................................... 19 6. Volatility/Acceptance. ................................................................................................ 20 D. Chokepoints.................................................................................................................... 21 1. AML Rules for Exchanges, Users, Miners................................................................. 21 2. But are these rules working? ...................................................................................... 22 3. State regulations may also apply. ............................................................................... 22 4. Ransomware Payments............................................................................................... 22

2