Crypto Lawyer: Can lawyers trade Crypto?

Have you ever thought about what crypto lawyers entail? Why is it essential to understand their role in the crypto world, especially if you are serious about getting involved and investing in cryptocurrencies? And finally, how did that right get involved in cryptocurrencies and investors?

First, in any business sphere, it is very important to have the legal protection that will regulate legal businesses and protect against illegal ones. So crypto lawyers are there for a number of reasons. Those specializing in Blockchain, Crypto, and Non-Fungible Tokens have recently been in high demand.

Not only Blockchain companies need a good crypto lawyer. Many individuals setting up crypto projects, or recouping cryptos that have vanished, require experienced cryptocurrency lawyers to help them legally.

But, before we get to the ethical question of whether lawyers are eligible to trade Crypto or not, let’s start from the very beginning, shall we?

Complex legal issues regarding cryptocurrency usage

The increasing demand and use of digital assets, particularly cryptocurrencies, has also raised complex legal issues regarding regulatory status, compliance, corporate law, securities transactions, fund formation, the launch of taxation, ETFs, derivatives, venture capital, anti-money laundering, regulatory enforcement, and litigation.

Cryptocurrencies and the decentralized, encrypted blockchain protocol that underpins them have grown into a transformational force since the launch of Bitcoin in 2009. That force is disrupting the way numerous industries across the globe will function and operate in the future years to come.

What’s obvious is that smart contracts and decentralized ledger technology will eventually reshape numerous industries such as:

• Logistic and supply chain
• Intellectual property
• Financial services
• Energy
• Health care
• Insurance
• The internet of things
• Sharing economy

The landscape for services and financial products integrating into Blockchain technology is evolving rapidly. A crypto lawyer is very much needed to serve clients by launching funds to invest directly or indirectly in digital assets, creating new tokens or coins in connection with launching new distributive networks, among others.

What is a crypto lawyer exactly?

A Crypto lawyer is a professional assisting corporations, startups, businesses, companies, and individuals in all aspects of Blockchain technology and cryptocurrency, including some of the following things:

• Copyrights
• Inventions
• Brand protections
• Trademarks
• Mining
• Commercialization
• Trade secrets
• Licencing
• Energy procurement

With the swift growth and advent of cryptocurrencies, primarily Bitcoin in 2009, Ethereum, Litecoin, Ripple, and Monero, legal issues in these disruptive and innovative areas are surfacing daily. A crypto lawyer is responsible for helping their clients navigate and blaze a trail in the Blockchain industry.

Working closely with their clients

A crypto lawyer works closely with clients for crucial reasons, such as crafting a path that assists them in achieving their goals and understanding their objectives. Their experience and practice in Blockchain technology are often supported by a well-established team with expertise in numerous areas affecting digital currencies.

That all includes:

• Initial Coin Offerings, in addition to regulatory hurdles,
• Securities and corporate laws
• Banking compliance
• Intellectual property
• Private equity,
• Real estate, corporate M+A, and privacy and cybersecurity.

In case a dispute arises, clients can rely on the highly experienced team of crypto lawyers and litigators that have successfully secured favorable verdicts for defendants and plaintiffs.

What are all the technologies expected of a crypto lawyer to know?

The extensive experience in cryptocurrency and Blockchain technology of these lawyers spans a variety of emerging and current technologies that include some of the following:

• Hardware and equipment design
• Website and application development and policies
• Software
• Digital currency, and more.

Good crypto lawyers must stay up-to-date with ever-changing trends, advising their clients on all the issues regarding initial coin offerings and crowdfunding.

What do crypto lawyers provide to their clients?

Cryptocurrency lawyers are responsible for some of the following things:

• Negotiating and preparing registration statements and other fillings.
• Representing registrants with proposals for SEC (Securities and Exchange Commission) that are registered cryptocurrency funds. This also includes proposals for obtaining exposure using futures contracts and cryptocurrency holdings.
• Assisting and advising private cryptocurrency fund sponsors on every aspect of the fundraising process. That fundraising lifecycle also includes regulatory compliance, fund formation, market terms, preparation of offering documents for new private crypto funds, global regulatory advice, carried interest, tax-efficient investment structuring, management equity arrangements, and other incentive structuring.
• A crypto lawyer is also responsible for advising clients regarding Investment Advisers Act, and Investment Company Act issues raised using Blockchain technology for conventional asset classes, i.e., custody.
• Working extensively with multiple divisions of the Securities and Exchange Commission relating to novel regulatory issues raised by these funds.
• Advising on Know Your Customer/Anti-Money Laundering issues and other compliance issues, the latest regulatory developments from the SEC, NFA, and CFTC regarding cryptos, cryptocurrency derivatives, and other digital assets.
• Working with corporations and companies considering ICOs, i.e., initial coin offerings, to navigate whether tokens are considered under laws and regulations.
• Advising on numerous money transmitters, money services businesses, and the registration requirements on money transmitters.
• Collaborating with venture capital companies on transactions that involve Blockchain-related companies.
• A good crypto lawyer will advise intermediaries on their compliance obligations in the Cryptocurrency economy, which includes exchanges and brokers.

Blockchain and Cryptocurrency Lawyers Counseling Clients

In short, Crypto and Blockchain lawyers work closely with Business, Corporate, Tax practice groups, and Intellectual property to counsel clients on the corporate structure that capitalizes the best on their IP assets. They also provide commercialization assistance for their client’s IP assets with selling, licensing, marketing, and other essential commercial uses.

Regularly, these lawyers assist with acquisitions and technology transfers. That includes partnerships, franchises, joint ventures, and other strategic alliances. It’s crucial to remember that a relevant crypto lawyer will also provide counsel to his clients on licensing the contractual agreements and general agreements necessary for protecting proprietary information.

This information includes non-disclosure agreements and non-compete agreements.

Is it ethical for lawyers to trade Crypto?

One of the most important questions that interest many crypto enthusiasts is whether a crypto lawyer is allowed to trade in cryptocurrencies? How ethical is that? Ever since the advent of Bitcoin in 2009, there have been some ethical issues concerning accepting cryptocurrencies in the first place.

It’s no secret that a lawyer cannot access clients’ funds until they are earned, thus, the existence of trust accounts. Besides that, a lawyer can accept the property as payment. However, there has to be a valuation for the property, and this is where digital currencies acceptance could get “muddy.”

Regarding US laws and rules, in some US states, there is a requirement that a fee for legal services needs to be reasonable. If a crypto lawyer receives a digital currency, he must immediately convert and exchange it for actual currency, putting it in his escrow account. The lawyer needs to note wording stating the number of bitcoins or other cryptocurrencies and the market value at conversion.

Converting cryptocurrency into cash

Most lawyers will use an exchange to convert the cryptocurrency into cash. However, the main question is who handles transaction fees, which could be substantial? What if the client insists that the crypto lawyer hold an advanced fee payment in Bitcoin or other cryptocurrencies instead of converting it to the US dollar?

And what if Bitcoin increases in value? In that case, the question is who gets the windfall—the lawyer or the client? Who will be the one to bear the risk if Bitcoin drops in value?

Potential ethical and criminal issues

Keep in mind that criminal defense lawyers could be the ones to face potential criminal and ethical issues if clients pay them with assets they have acquired through illegal conduct. Also, those lawyers accepting Bitcoin as payment are often criminal defense attorneys.

Those concerned about the privacy and inability to prove the connection between Bitcoin and conduct, it’s obvious that federal authorities believe that Bitcoins and other cryptocurrencies are used mostly for keeping criminal activities financially untraceable.

On the contrary, numerous legitimate businesses across Europe and the United States accept Bitcoin, including Expedia, Dish Network, and Overstock.com. Another crucial question arises: What if lawyers wish to keep their cryptos for personal use? Can they keep the Crypto in their electronic wallet and deposit cash in the trust account on behalf of their clients?

What if lawyers want to keep cryptocurrency for their use?

It is crucial to know that if lawyers want to keep Crypto for their use, the outcome depends on whether the Bar considers Bitcoins “property” or “funds” one client aims to entrust to the lawyer. According to US Rule 1.15, client “funds” belong in a trust account. However, the crypto lawyer needs to keep the client’s “property” safe.

Since a crypto lawyer cannot deposit Bitcoins in a trust account, it is a great problem describing them as “funds.” If a client pays the lawyer in bitcoins for past legal services, the lawyer has earned the fee that becomes the lawyer’s property. He then accepts the risk concerning his property.

Bitcoins, without exception, cannot be deposited into a bank account isn’t an ethical issue in case the Bitcoins are paid toward an earned fee. Even if the client has paid the lawyer fee in cash, a lawyer cannot deposit an earned fee in a trust account since it would be commingling.

All these ethical rules don’t require cryptocurrency lawyers to deposit earned fees in operating accounts either. The crypto lawyer can deposit the cash directly into a personal checking account. However, if the client gives his lawyers Bitcoins as an “advance fee,” there are some issues. Most people think of Bitcoin as “shady money” and could regard lawyers accepting Bitcoin as “shady lawyers.”