The mainstream adoption of cryptocurrencies has been the major focus of a lot of crypto companies, with many citing examples of success by tying up with financial institutions. Despite the positive push received by mainstays and financial bigwigs, reports have surfaced that the use of cryptocurrencies may have legal issues associated with it.
Sources claimed that client cryptocurrency payments may pose an ethical risk for lawyers, especially since the push by cryptocurrencies into the world of law and order was very recent. Law firms have increasingly started accepting cryptocurrencies as a form of payment, but the march forward has been hampered by supposed potential risks.
Officials from companies such as Frost Brown Todd LLC, Steptoe & Johnson LLP, and McLaughlin & Stern LLP earlier confirmed that they were looking at crypto as a payment option. An overall analysis of the claims made by the firms points to the fact that these companies are willing to venture into the cryptosphere because it diversifies their customers’ options.
Mathew K Roskoski, the deputy general counsel at Latham & Watkins, admitted that some lawyers chose to accept digital assets to portray that they are “hip and cool and on top of stuff”. The main point of discussion seemed to be the appreciation of assets when transferred from a client to a lawyer. Roskoski added:
“Cryptocurrency does not fit with the model for trust funds — lawyers should not accept cryptocurrency as trust money.”
Reports show that during a cryptocurrency exchange between a client and the lawyer, a lot of rules come into play that require both parties to be fully committed to the deal. Some states in the US have worked a way around the issue of appreciation of assets by ruling that these payments are acceptable as long as the assets are sold or liquidated into fiat money right away.
Law firms raised the issue of ICOs too, with many positioning themselves against the model and the confusing regulations surrounding it, put forth by the Securities and Exchange Commission [SEC]. The SEC has been in the news multiple times over the past couple of months with its officials assessing the crypto-space with caution. Recently, Hester Pierce, the Commissioner of the SEC, stated:
“At the SEC we’ve been unwilling to sign off on a Bitcoin ETF, an exchange-traded product based on Bitcoin. My concern about our approach in that area is it looks a little bit like a merit-based approach judging the underlying bitcoin markets.”
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