Editor's Note: This article comes fromCarbon chain value (ID: cc-value), reprinted by Odaily with authorization.

Editor's Note: This article comes from

Carbon chain value (ID: cc-value)

Carbon chain value (ID: cc-value)

, reprinted by Odaily with authorization.

Author: Brian Brooks, former Coinbase executive and acting director of the U.S. Office of the Comptroller of the Currency

Compiled by the carbon chain value original team

In 1962, Popular Science magazine published an article in which it envisioned a future of self-driving cars - and it turned out that reality came sooner than anyone expected, and for road traffic safety regulators, they were not here yet and adapt to industry changes, the era of self-driving cars has arrived.

The vast majority of current automobile laws and regulations are limited to speed limits, signaling, drunk driving, etc., and are basically designed to prevent potentially dangerous drivers, not potentially dangerous cars. Yet self-driving cars introduce new risks that have never been considered in traditional legal rules. As the well-known technology media "Connection" previously raised a question:

• "Who is regulating self-driving cars? Basically, no one."

• Similarly, banking is moving forward. A new business model driven by decentralized finance (DeFi) technology has emerged, but just like the original traffic industry regulators set the road laws and regulations only to protect drivers from infringement, current banking regulations are mainly designed to prevent artificial fault.

• At the Office of the Comptroller of the Currency, we require every bank to have managers responsible for compliance and security, such as chief risk officers and chief audit executives; we limit the amount of loans that banks can provide to their executives; we even Putting some bank employees on “rotational leave” so that others can sit at their desks and spot potential fraud – while we call these measures banking regulation, we are actually regulating banks.

However, DeFi turned everything around. Using blockchain technology, DeFi can provide financial services without human intervention. For example, money markets can be created using interest rates based on an algorithm based on supply and demand, but in traditional banks, setting interest rates usually needs to be performed by a dedicated interest rate committee. Additionally, there are many other DeFi projects, including:

Decentralized transactions;

Allow users to trade without a broker;

• Loan contract agreements can be enforced without the involvement of loan officers or credit committees.

• Although these “self-driving banks” are new, they are not small, and such banks are likely to become mainstream before self-driving cars start to catch on.

• But self-driving banks face the same challenges and opportunities as self-driving cars.

In terms of opportunities:

• Through the algorithm, depositors can obtain very comprehensive interest rate information, so they can choose to provide the best interest rate financial institutions;

• Through software, the financial system can make the most reasonable credit business decision and judge whether it is possible to lend money to certain borrowers, thereby eliminating the problem of "human discrimination";

• A “self-driving bank” might not even be run by a human, eliminating the risk of fraud or corruption.

However, self-driving banks also face new risks:

If technology accelerates withdrawals of depositor funds, in the same way that high-frequency trading can accelerate stock sell-offs, this could increase liquidity risk compared with traditional banks;

Asset volatility may be another issue for similar reasons;

Additionally, the management of loan collateral can be more difficult if no one is involved in the valuation.

There is also a risk that, in the absence of clear national-level regulation, U.S. states may rush to fill regulatory gaps, likely creating a series of inconsistent laws and regulations that hinder the orderly development of the entire nation's financial system.

In fact, this is exactly what is happening in the self-driving car industry.

As a result, U.S. federal financial regulators must determine what a regulatory scenario for a “robo-bank” should look like, and whether this type of bank can ensure fair treatment of customers. Of course, most of the current deviations and compliance problems encountered by "self-driving banks" are so-called "software failures"-note that the software mentioned here is not software written by programmers, but the kind of software created by human thinking. Existing bias, while this bias may seep into algorithmic rules, is also easy to eradicate.