Since the release of Bitcoin in 2009, cryptocurrency and other cryptoassets have steadily grown in popularity, attracting both more and increasingly well-known investors. Banks are becoming more and more interested in it, and companies specializing in technology, security, finance and insurance are all taking notice and finding their niche within the blockchain industry as well.
Unfortunately, despite their decade-long existence, the laws and regulation around cryptoassets are still in their infancy.
Much like hedge funds 15 years ago, people are making a lot of money dealing in cryptocurrency, but governments are not sure how to regulate the growing industry. Since cryptoassets are global in nature, there is no one governing body or bank to streamline their management and regulation. For companies operating in the crypto space, they are serving consumers, as well as more sophisticated investors—making the regulatory and reputational risks even higher. Especially as the SEC and Biden administration looks to establish regulatory frameworks around crypto and blockchain in the near future, bringing on the right regulatory talent has become essential for crypto companies. Further to that, in order to ensure the maximum level of protection for their businesses and their clients, they must prioritize onboarding those experts in-house.
Due to the ever-increasing regulatory burden and uncertainty in the industry, having in-house lawyers who are deeply familiar with the company, the business models, and its unique needs—is an essential step for crypto companies. These businesses are aware that with new regulation, noncompliant companies can be targeted as a precedent “test case,“ which comes with negative publicity. As these financial products affect retail investors, in-house expertise is also increasingly necessary in order to keep up with the fluidity in the industry and to build better institutional knowledge within an organization. These new regulatory counsels will be advising on a wide range of regulatory matters affecting the company’s business, as well as identifying areas of vulnerability that pose regulatory risk to their employer and advise on potential solutions to mitigate these risks.
Given that many attorneys don’t have direct crypto experience, cryptoasset companies should prioritize attorneys who are already well-versed in the regulatory space, whether are they focused on regulatory matters in their private practice or come from another subsector of financial services with both institutional and retail investors as clients. While a risk-adverse lawyer may find the crypto space a little too unpredictable, the more adventurous will discover a challenging career opportunity in front of them that allows them to get to know the ins and outs of one client—an often sought-after benefit of moving in-house—and demonstrate their nimbleness and forethought.
More so, what really makes these roles challenging is the need to be creative and think outside of the box because there might be no legal precedent on the areas of the law they are working on—and likely no playbook to refer to. It is a fast-moving industry that requires a lawyer to think on their feet and know how to use their own intellectual agility to make educated decisions.
The world of cryptoassets is not slowing down any time soon, and to capitalize on the market and future advancements, companies are wise to focus on having legal counsel in-house who can address the few existing regulations, navigate the unknown, and plan for how the regulatory space will evolve.
Simon de Meo is a director in the Washington, D.C. office of leading legal recruiting firm Major, Lindsey & Africa. As a member of firm’s in-house counsel practice, DeMeo works on retained searches, placing general counsel, senior legal counsel, and compliance professionals for multinational corporations across a diverse spectrum of industries.