Crypto lawyers are in high demand. Cryptocurrency companies are hunting for talented Compliance Officers, Legal Counsels, Dispute Managers and more. A quick search on LinkedIn shows approximately 486 blockchain legal job postings in the United States and 747 worldwide.
There’s no denying the momentum behind crypto and we believe it is only the beginning. You can use cryptocurrency to buy a Tesla, a ticket to your favorite event, furniture for a new house or even just a pizza. At the time of writing, 15,174 companies worldwide accept bitcoin, 2,300 in the US. While cryptocurrency isn’t part of everyone’s day-to-day life, the number of companies that use cryptocurrency as a method for payment is exploding. These same companies need more lawyers that are experts at blockchain and cryptocurrency to navigate complex compliance and legal issues.
Based on Statista’s research, the number of cryptocurrencies created by companies in 2021 peaked at over 6000 currencies, leading to the splitting of the total value of the tokens in the cryptocurrency market. Fromcoinmarketcap.com, the total cryptocurrency market cap is currently valued at $2.4 trillion.
Statista: Number of cryptocurrencies worldwide from 2013 to August 2021
With recent explosive growth, there are many different schemes of criminal activities that occur daily in the world of crypto. Regulatory organizations aim to protect both customers and assets against illicit behaviors. Considering the challenges imposed on cryptocurrency companies by both criminals and regulatory organizations, lawyers equipped with a specific set of knowledge and skills are in high demand by the companies operating in the cryptocurrency field.
Over the years, evidence of illicit activities have proven to exist and on terrifying scales. One example of terrible crime is a hacking attack against PolyNetwork, a platform that lets users swap tokens from one digital ledger to another, the hack was claimed to be performed by a single person who looted $600 million worth of digital assets. Another more recent example is a hacking activity that impacted over 6,000 Coinbase customers. Coinbase is a cryptocurrency exchange located in San Francisco which a user can use to buy, sell and/or store cryptocurrency.
Below is a graph of the Polynetwork hack made with QLUE™, our crypto investigative tool. PolyNetwork is represented in the center. The hacker stole crypto and sent it to dozens of addresses around the center dot.
What makes an expert crypto lawyer?
Understanding blockchain technology is the first step towards understanding cryptocurrency as it explains how a distributed, decentralized, P2P Network contains all the transactions initiated and received by the users of cryptocurrency. This network, known as a blockchain, is increasingly under regulatory scrutiny and a medium for illegal conduct. A crypto lawyer must have a solid grasp of this technology.
Multi-Jurisdictional expertise gives lawyers the edge they need, to protect their clients and prepare them for the challenges that confront a global company and/or regulated industry.
Companies that possess, licence or manage personal data must comply with privacy and security laws. When companies bring new or existing goods into a jurisdiction, or when data is transmitted over political borders, they are subject to new regulations from one or more regulatory authorities. Amazon, Visa, PayPal, Expedia and many other major global companies service customers from the United States, Canada and the rest of the world.
The Bank Secrecy Act (BSA) regulates cryptocurrency exchanges in the United States. Exchanges must also register with the Financial Crimes Enforcement Network (FinCEN) as a Money Service Business (MSB). They must also adhere to anti-money laundering (AML) and counter-terrorist financing (CFT) requirements of the country. In order to operate in Canada however, exchanges and cryptocurrency dealers must register with provincial regulators and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
In South Korea, more than 60 cryptocurrency exchanges were recently suspended from trading, a week before a new regulation comes into effect. Binance, Coinbase and Kraken, among other cryptocurrency exchanges, may be compelled to gather information about people transferring and receiving cryptocurrency under new rules proposed by the European Commission. More new regulations in the fields of compliance, AML, Smart Contracts, NFTs, Taxation are part of every day discussions around the globe.
An erudite lawyer not necessarily expert in all fields but flexible enough to keep up with the impromptu change is indispensable to the crypto industry.
What are the main services a crypto lawyer can offer to cryptocurrency clients?
The nature of cryptocurrency brought unique rules and regulations to the equation as jurisdictions made steps towards regulating crypto. Let us take fundamental legal services into a cryptocurrency context.
Legal Counseling: Similar to traditional organizations, cryptocurrency exist in B2B2C industry and have specific and strict financial and legal regulations which requires expert legal advice to maintain a compliant infrastructure and resist fraudulent activities in the fields of Cybersecurity, Tax, Data Protection, Arbitration, European GDPR, and cryptocurrency-specific regulations
Contracts: Smart Contracts are digital and central to 100s of 1,000s of cryptocurrencies. A Smart Contract is an automatable and enforceable agreement. Automatable by computer, although some parts may require human input and control. Enforceable either by legal enforcement of rights and obligations or via tamper-proof execution of computer code. In turn, a crypto lawyer needs to be ready to argue and even write the complex conditions of a smart contract.
Legal Representation: Cryptocurrency is legal under strict and clear regulations in some parts of the world which expands the role of law enforcement and may require cryptocurrency owners to adhere to subpoenas, audits and seizures. Clients then seek professional support from expert crypto lawyers to effectively protect and represent them in court.
Dispute: The management and resolution of disputes is core for cryptocurrency service providers, i.e. exchanges, where customers trust their intellectual property to the company in exchange for service of specific quality and strict deadline. In 2018, The Miami Blockchain Group released ‘Smart Arbitration & Mediation Blockchain Application’ (SAMBA) first blockchain application developed specifically for the international dispute resolution community. The method for resolving some of those disputes is built into the smart contract itself, counting on lawyers to establish the rules upon which the contract will automatically settle the dispute resolution.
The future of legal includes blockchain. Without building expertise, you risk getting left behind a dynamic growing industry. One way to start developing crypto expertise is through our on-demand Certified Cryptocurrency Investigator course. If crypto is involved in any of your current caseload, see how our intelligence tools can help, get in touch today.
