Blockchain-based companies such as Bitcoin and Ethereum began on the platform of decentralization, but it is critical to understand that blockchain isn’t inherently decentralized. When Bitcoins can be exchanged, there is no need for a conventional bank or third party because each transaction is recorded in a publicly-controlled ledger built on blockchain technology. These companies operate without the need for these intermediaries and institutions, but that doesn’t mean they can only run that way.
President Biden’s executive order “Ensuring Responsible Development of Digitial Assets” called on entities such as the Federal Reserve System to learn more about how our government can protect consumers, promote growth in the industry, and combat illegal activities fueled by cryptocurrency transactions. This Order also asked the Federal Reserve to research the possibility of creating a central bank digital currency (CBDC). Though early blockchain advocates opposed regulation, the industry’s rapid growth and its acceptance by consumers forced the government’s attention. Furthermore, there is a lot to be gained from it. The safer the currency is, the more likely it can be adopted by policymakers, consumers, and investors.
The potential for increased regulatory oversight has created the demand for legal counsel. Kraken is a cryptocurrency company based out of San Francisco, and their Chief Legal Officer reported in February of 2022 that they planned on hiring 30 lawyers within three months.
Beyond Currency
The need for legal counsel is becoming present for companies who create blockchain and those who plan to incorporate it into their business model. Ethereum made it possible to integrate code into their ledger, enabling the sale of NFTs, namely artwork. However, the applicability of blockchain and distributed ledger technology expands well beyond the sale of artwork.
These ledgers can be used to document the sale of a home as easily as they do other transactions. Companies that create new iterations of blockchain are in critical need of talented attorneys who understand the nature of the product. Many of their needs, such as entity formation and offering legal advice in terms of maintaining compliance with rapid changes in regulatory compliance that we may see, are identical to the needs of any other business. When attorneys work with startups, they can be quickly folded into the management team because growing successfully and legally depends on their guidance and advice.
Inceptiv Law
Inceptiv Law serves clients in high-growth companies that either create blockchain technology or wish to incorporate it into their business. With large firm and in-house experience, we deliver valuable advice to companies who need to be in contact with legal counsel to grow successfully. Contact Inceptiv Law to schedule your consultation.
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