Democratizing Finance: The Role of CDFIs and MDIs in the Blockchain Era

One of blockchain's biggest opportunities is the democratization of finance, and blockchain can do so by expanding economic opportunities so anyone anywhere can interact with digital assets, and no one can be debagged.

Well, community development financial institutions or CDFIs are part of this, and these specialized financial institutions.

Aim to provide credit, capital, and financial services to underserved markets and populations while blockchain education and participation can drive income opportunities and also lift up the global digital economy by bringing more wealth on chain.

Joining me this morning to weigh in is Cleve Massador, executive director of the Blockchain Foundation.

Good Morning.

Thank you so much for joining us.

Well, it's great to have you back on.

I know that it's that time of year, summer coming to an end with lots of anticipation heading into September.

Now you're just wrapping up the annual blockchain brain trust retreat in Martha's Vineyards.

So let's get straight to CFDIs as well as MDIs.

How are they actually assessing digital assets right now?

Well, good morning.

Thank you for having me on and excited about this fall Congress comes back in sessions, the crypto conversation ramps back up and for the work that I do, it's about increasing access to digital assets.

It's about increasing financial education and the CDFIs that you mentioned, the MD.

Guys, neobanks, the small subsets of the banking systems are very critical to how we ensure that we are creating an open financial system, you know, just from your show today we've seen so many traditional financial institutions look at digital assets look at tokenizations look at how to enter this space.

And we shouldn't leave out the smallest institutions, the ones that working class individuals, young people, rural communities trust, because those are the institutions that can offer digital assets, but more importantly they can also offer risk mitigation services they can also offer financial education and tools for individuals.

To protect themselves and even early warning systems for digital wallets, so I think it's really important as Congress comes back and market structure, the the the market structure debate continues and the Senate looks at their bill and the blockchain Foundation has actually recommended a provision.

Because the the regulators that oversee CDFIs MDIs are the Fed FDIC OCC, and we recommend that as part of the market structure bill the Senate should include a provision that says that these regulators should do a study of CDFIs MDIs.

And neobanks and see how they can actually offer digital assets increase access but also offer financial education and risk mitigation tools.

Yeah, and I'm glad you brought up education because it is back to school season and it's also back to the hill for Congress as well.

So when we're talking about minority depository institutions or MDIs which are owned by minority groups, give us the Blockchain Foundation's recommendation for oversight.

Yeah, you know, we're we're talking about financial education.

Financial education is not what we used to think of it, you know, today we know that young people have demanded financial education and we have about 3030 states that require financial education to graduate from high school.

Like we know that we have to educate people about stable.

Coins as we implement the new law and make sure that entrepreneurs know and small businesses know how they can access stable coins we know that today more people are participating in the financial financial system whether it be you know retail investors or new consumers we've seen this on Robin Hood and Cash App.

Right, so participating in the financial market are people who the the the issue is not literacy.

The issue is how do you expand, how do we expand everybody's financial education base, you know, being in crypto has opened my world to ETFs and options in a way that I would have never done.

I would say. for crypto because I follow I'll invest in whatever is included in crypto.

So think of all of the people who just need further education on accessing financial markets.

So this is not about financial literacy.

I remember when I worked in Congress years ago I worked for Betty McCollum when we had to figure out if we're gonna go to.

And bail out the financial systems and Betty McCollum was the first one to say, well, do members even understand what derivatives are how do we regulate and decide to bail out a financial system where when we don't even know a lot of the trading options that they offer and insisted on financial education.

Members of Congress, so financial education is about what we're doing.

We're redesigning and we're redefining our financial system.

We're redefining payments and money and commerce, and we have to make sure that all aspects of our consumer base, whether they're Gen Z, whether they're millennials, Gen Xers.

Boomers have access to financial education.

That is risk mitigation.

That is a guard rail that every consumer should have, but going back to what we're talking about.

The institutions, the financial institutions that can actually offer this to consumers are the smallest subsets of our banking system, and that is our CDFIs, our MDIs, our credit unions, our neobanks, and we have to make sure that they're part of this policy debate that we're having around what is the appropriate regulatory and policy framework for the future of digital assets.

Well, Cleve, we will have to leave it there, but conference season is upon us, so I look forward to continuing this conversation on the road.

Thank you for your insights.

Thank you.