Blockchain technology has paved the way for crypto to become a viable and burgeoning part of the American economy. The ability to store large amounts of data and facilitate transactions has led to the widespread adoption of this technology. What was once a curiosity is now an accepted part of the mainstream.
While blockchain technologies are primarily associated with cryptocurrency, there are many more uses, including:
As business becomes more decentralized and complex, the number of uses of blockchain is increasing. Blockchain is making many industries more accessible. In addition, it is also used to underpin non-fungible tokens.
However, blockchain is still in its infancy, and the technology is rapidly changing. Regulators, who were initially behind the curve, are now catching up, forcing market participants to invest more in compliance. If you are a participant in blockchain technologies, you need the help of an experienced lawyer to guide you through the changing legal process.
Along with any new technology comes disruption. When a market is just beginning, there may be different legal interpretations and a greater possibility for disputes among market participants, many of whom are just getting a better handle on the technology.
There are numerous business and technical issues involved in blockchains. If you are setting up a business entity, you would need the legal infrastructure in place that would include the following:
You need an established company in place that is capable of gaining the trust of stakeholders, customers, and financiers. Further, your business form may be adapted and changed over time as your business grows.
One of the major legal considerations that relate to blockchains is whether they are considered securities under federal law. If they are, one would need to register the offering with the Securities and Exchange Commission before it can be sold. If a contract meets the four-part Howey test, it would be considered a security, no matter what you call it. Those who sell unregistered securities could find themselves in trouble with the SEC. When transactions are registered, they will require that you follow a myriad of rules.
Federal regulators are increasingly taking a more assertive stance with regard to blockchain-related issues. These regulators can include agencies such as the SEC and Commodity Futures Trading Commission. Oftentimes, market participants will learn about regulatory interpretations through informal guidance of enforcement action. If the regulators have contacted you or they are investigating, you will need defense from an experienced attorney.
In addition, the Office of the Comptroller of the Currency regulates banks and their cryptocurrency offerings and whether a fintech company can become a bank. Finally, the IRS, as always, is involved when there are tax issues.
The challenge is that there is no primary regulator for blockchain right now. There is a patchwork approach and numerous agencies that may issue guidance and come knocking at your door. You need an experienced attorney who closely follows current developments and keeps you up to speed and one step ahead.
Since blockchain underlies digital transactions, there are also banking-related regulations for some companies. For example, companies would need to follow anti-money laundering regulations. If they have a customer-facing business, they would need to comply with “Know Your Customer” rules. Alternative currencies are subject to the same rules as physical currencies.
You will also need an experienced lawyer if you are involved in a blockchain-related dispute. Here are some common examples of blockchain-related disputes:
Blockchain disputes are being referred to arbitration more often these days, based on the choice of the parties or a requirement in a contract. You need a blockchain attorney who can represent you in a number of forums, no matter the issue that is in dispute. Many blockchain cases present issues of first impressions in courts that have never been called on to decide these types of disputes before.
When you need a blockchain lawyer, you should opt for an attorney with specific experience in the field. In addition, you want an attorney who can take a multi-disciplinary approach to your issue, anticipating other related legal challenges. The attorneys at Traverse Legal LLC are experienced technology lawyers who work with clients on emerging technology issues. You can speak to an attorney by calling us today at (866) 728-2197 or sending us a message online.
Traverse Legal’s Attorneys are globally recognized for their experience and results in the legal areas of: Complex Litigation, Internet, Trademark, Copyright, Cybersquatting, Drone, Defamation, Trade Secret, Non-Compete, and Business Law.