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How Aspiring Lawyers Can Prepare for a Career in the Blockchain World

From litigation to business, from intellectual property to so-called “smart” contracts – which are generally not legal contracts – practicing as a blockchain lawyer is a multidisciplinary practice. Three keys will help lawyers prepare for a career in the blockchain world:

  1. Understand the technology
  2. Find a practice
  3. Participate in the community

Understand the technology

Blockchains are, at their core, trusted machines that replace traditional intermediaries with technology that minimizes costs, adds transparency, and enhances transaction security.

An essential first step for any lawyer looking to enter the space is to understand how blockchains work. This knowledge not only provides a foundation for any blockchain-based practice, but will also allow lawyers to speak with their clients in a language that those clients understand.

Find a practice

After understanding the technology, the next step is to identify an interesting blockchain-based practice and become familiar with the law. Unlike most areas of practice, in blockchain multiple regulators often claim jurisdiction over blockchain activities, and there is little or no actual “law” on the point.

“No one really knows what’s going on in crypto law,” said Blockchain Association policy officer Jake Chervinsky. “We kind of make it up as we go.”

Blockchain lawyers often have to glean the law from regulatory announcements or other areas of law written long before blockchains were created. In practice, this means looking to more established areas of law and reasoning by analogy or using public policy arguments to provide helpful advice to clients.

Take the example of financial regulation.

The purchase, sale and transfer of crypto-assets may be regulated by the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and/or the IRS. None of these agencies provided clear regulatory authority for crypto. Instead, they made statements, often without precedent value, indicating their position on various issues. In the US, to make matters worse, different types of crypto are treated in different ways by regulators:

  • The SEC treats certain cryptos as securities and regulates both the issuance and secondary trading of securities.
  • The CFTC treats certain cryptos as commodities and not only regulates crypto products, but also crypto derivatives markets and certain asset-backed lending products.
  • The IRS treats crypto like property for tax purposes and has issued a number of statements and rulings regarding both taxpayers’ obligation to report crypto transactions and how that reporting should be done.

Depending on the activity, crypto transactions may fall within the regulatory scope of the Bank Secrecy Act, which may mean that entities must register with the Treasury’s Financial Crimes Enforcement Network (FinCEN), as well as one or more US states where they operate. Typically, such registration will also require entities to implement anti-money laundering, know-your-customer, and anti-terrorist financing programs.

Since crypto is global in nature, customers may face regulatory obligations in multiple foreign jurisdictions. For example, the European Union’s General Data Protection Regulation (GDPR), which governs privacy and other issues related to the development and adoption of blockchain technology and distributed ledgers, imposes additional, sometimes conflicting, regulations on companies that offer products in the United States and the United States. EU customers.

Apart from purely financial practices, lawyers can find many other blockchain-based practices, including:

  • General business: Blockchain-based businesses face many of the same business needs as traditional businesses. Lawyers need to work with clients on how to pay for and accept crypto as payment for products and services, how to store funds received, and how to manage smart contract risk.
  • Finance: Since many blockchain platforms are involved in decentralized finance (DeFi) or centralized finance (CeFi), lawyers must ensure that DeFi and CeFi borrowing and lending transactions not only comply with applicable laws and regulations, but also ensure that the platform minimizes smart contracts, custody, and other risks so that the platform can operate securely.
  • Intellectual property: Many crypto issues involve intellectual property, including patents for blockchain technology, and copyright issues related to the creation and sale of non-fungible tokens (NFTs). The rules for many NFT copyright issues can be found in a platform’s terms of service, and attorneys are integral to drafting those documents.
  • Litigation and Dispute Resolution: Blockchain and crypto create many issues that require traditional advocacy skills, from representing clients in administrative, civil and criminal cases to internal and external investigations on behalf of clients.
  • Tax: Crypto tax lawyers must deal with compliance issues regarding the tax implications of transactions for which the IRS has issued no guidance – for example, are staking rewards payable in the staked token taxable? of activities.

Participate in a community

In the blockchain space, “proof of talent” is often more important than credentials. Since many conversations in the blockchain space take place virtually, lawyers need to engage in these spaces and demonstrate their expertise and passion. This means writing, not necessarily lengthy law review or academic papers, but papers that address open issues and reach out to the community. Places for these articles can be bar reviews or online publications such as Medium, but most often they are non-traditional places such as blog posts, Discord posts, and tweets. These direct writings help others navigate the space, expand a lawyer’s brand and reputation, and build the community of people who could be potential clients.

Chervinsky, one of the best-known lawyers in the space, has gained a foothold in crypto law by regularly tweeting his thoughts on legal matters. He’s turned his tweets (and insightful legal analysis) into a career that has included work at Compound Labs X and his current position as a policy officer at the Blockchain Association.

Finally, I encourage lawyers to join communities of interest by attending conferences or meetings. The audience for these events are mostly developers or entrepreneurs and are in desperate need of legal talent. In my experience, simply by presenting yourself as a competent lawyer, opportunities will arise.

Nihit Desai, a 20-something partner at a boutique law firm, told me in a June 15 phone call that “the conferences I’ve attended have brought me new clients and valuable relationships, which allowed me to develop my practice”. I share this view and encourage lawyers looking to enter practice to come forward and engage as a way to build a practice.

This article does not necessarily reflect the views of the Bureau of National Affairs, Inc., publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Del Wright is an author and professor at the University of Missouri-Kansas City School of Law, where he teaches finance, business, securities, tax, blockchain, and cryptography. He was previously a federal prosecutor and attorney at Skadden, Arps, Slate, Meagher & Flom LLP. His current research focuses on the regulation of blockchain technologies, as well as tax and corporate law.

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