Seymour on The New Fintech Federalism

Benjamin Seymour (Yale Law School) has posted “The New Fintech Federalism” (24 Yale J.L. & Tech. (2022, Forthcoming) on SSRN. Here is the abstract:

U.S. law has struggled to accommodate the rise of fintech. Instead, the United States has lumbered under a division of regulatory authority between the state and federal governments designed for a financial landscape comprised of banks and large, systemically important shadow banks.

To catch up to the market, state and federal officials have under-taken a diverse array of initiatives. Numerous regulators have relied on the prevailing paradigm of the past century, seeking to extend its already stretched logic into the realm of fintech and exacerbating its many shortcomings in the process. But several regulatory initiatives of the past decade have broken with prior thinking and charted a different path, one that redefines the relative realms of the federal and state governments and promises a legal regime suited to the technological realities of twenty-first century finance.

This emergent paradigm—the New Fintech Federalism—constitutes a radical reversal of the prior division of authority between state and federal actors. Through both cooperative and unilateral initiatives, the states are increasingly adopting an entity-based approach rooted in interstate reciprocity that inures the benefits of jurisdictional competition and reduces the costs of redundant mandates. Meanwhile, by focusing on financial activities, the federal government is pursuing a consumer protection framework less prone to arbitrage and a view of prudential risk suited to the fragmentation of fintech.

This Article is the first to identify the New Fintech Federalism, examining how its disparate set of legal experiments could revolutionize U.S. financial regulation. It also details a statutory intervention that would promote the interests of entrepreneurs and consumer protection advocates alike by codifying this emergent approach. Far from jettisoning federalism, this Article’s proposed legislation would harness the distinctive strengths of the state and federal governments to bolster America’s economic vitality and global competitiveness.

Penney on Understanding Chilling Effects

Jon Penney (University of Toronto) has posted “Understanding Chilling Effects” (106 Minnesota Law Review, forthcoming) on SSRN. Here is the abstract:

With digital surveillance and censorship on the rise, the amount of data available online unprecedented, and corporate and governmental actors increasingly employing emerging technologies like artificial intelligence (AI), machine learning, and facial recognition technology (FRT) for surveillance and data analytics, concerns about “chilling effects”, that is, the capacity for these activities “chill” or deter people from exercising their rights and freedoms have taken on greater urgency and importance. Yet, there remains a clear dearth in systematic theoretical and empirical work point. This has left significant gaps in understanding. This article has attempted to fill that void, synthesizing theoretical and empirical insights from law, privacy, and a range of social science fields toward a more comprehensive and unified understanding.

I argue that conventional theories, based on fear of legal or privacy harm, are narrow, empirically weak, cannot predict or explain chilling effects in a range of different contexts, and neglect its productive dimensions—how chilling effects shape behavior. Drawing extensively on social science literature, I argue that chilling effects are best understood as a form of social conformity. Chilling effects arise out of contexts of ambiguity and uncertainty—like the ambiguity of public or private sector surveillance—but have deeper psychological foundations as well. In moments of situational uncertainty, people conform to, and comply with, the relevant social norm in that context. Sometimes this means self-censorship, but most often it means more socially conforming speech or conduct. A theory of chilling effects as social conformity has important normative, theoretical, and empirical advantages, including greater explanatory and predictive power, clarifying what chilling effects theory is for and what it produces, as well as providing a basis to navigate competing and differing chilling effect claims. It also has implications, I argue, for constitutional standing as well as the First Amendment chilling effects doctrine.

Low, Wan & Wu on The Future of Machines: Property and Personhood

Kelvin F.K. Low (NUS Law), Wai Yee Wan (City University of Hong Kong), and Ying-Chieh WU (SNU Law) have posted “The Future of Machines: Property and Personhood” (The Cambridge Handbook of Private Law and Artificial Intelligence, Forthcoming) on SSRN. Here is the abstract:

The use of tools was once believed to be a distinguishing feature of human intelligence which allowed us to deny personhood to animals, which like tools, were property rather than persons. As we get increasingly dependent on our increasingly sophisticated tools, the law will need to consider when (if ever) machines cease to be mere tools and become a part of our person. Could they even increase in sophistication to the point when they may be conferred legal personhood? Or will rapidly advancing machine intelligence first strip us of our personhood? Might the law of property prove to be a bulwark against such an outcome?