Crypto Execs Want Regulation, But Willing to Assume Legal Risk Anyway, Foley & Lardner Survey Says
The survey of 62 crypto executives found that 84 percent are hoping for more federal or state regulation, and 89 percent want some form of self-regulation.
July 03, 2018 at 12:00 PM
3 minute read
Cryptocurrencies. The meteoric rise of cryptocurrency in the last few years has created some serious headaches for the attorneys hoping to advise their clients accurately. The uncertainty around what law governs cryptocurrency certainly hasn't stopped its development, but as cryptocurrency begins to mature a little, those operating in the space seem to be looking for a little more guidance. A new study of cryptocurrency executives by law firm Foley & Lardner found that while crypto heads are still willing to take some pretty alarming legal risks around crypto-based ventures, they'd also like to see more regulation governing cryptocurrency. The report, which polled 62 different cryptocurrency investors, executives, and legal professionals, found that 84 percent believed cryptocurrency should be regulated by federal or state authorities. Of these, 68 percent sought regulation around the purchasing and sale of cryptocurrency, and 55 percent want to see regulation for cryptocurrency payments. Most of those polled also expressed interest in industry self-regulation, built on a set of community-developed standards. Eighty-nine percent thought that industry leaders should pursue standards for self-regulation, while 59 percent of these thought those standards should be subject to government oversight. Both Kathryn Trkla and Patrick Daugherty, partners at Foley & Lardner and members of the firm's blockchain task force, were a bit surprised by the industry's favor for both internal and external regulation. Given cryptocurrency's roots as an anti-institutional financial structure, not to mention that leaders in any industry rarely seek out regulation, the crypto leaders' posture toward regulation could seem somewhat unexpected. It may be that crypto leaders are sensing and embracing the likely inevitability of cryptocurrency regulation, and hope to adopt some strong self-determined guidance ahead of state and federal regulators. It could also be that many are tired of operating in a state of legal uncertainty, which 72 percent of the report's respondents flagged as a concern. Nevertheless, 58 percent, nearly three of every five crypto heads, are willing to assume the legal risk to invest in or develop crypto products. “That's got consequences for lawyers, as you can appreciate, because we cannot advise our clients on a course of conduct that is unlawful,” Daugherty noted. “There is such an absence of rules, regulations and standards right now that greater involvement by the regulators would point the way toward lawful product development,” Daugherty said. Trkla noted that to some extent, crypto operators aren't in need of more regulation, but rather a better sense of how current finance regulation may or may not apply to their products. “Regulation is already here; the uncertainty has been in how it applies. Any steps on the [U.S. Securities and Exchange Commission] side to help bring clarity as to whether a particular token is or is not a security, that's kind of the first step,” she said.
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