Blockchain Laws and Regulations: How Attorney Katya Fisher Helps Tech Companies Navigate the Space
Although some businesses, governments, and individuals have yet to realize blockchain’s potential, plenty are already working on using the new technology to make existing processes more efficient, or to develop new service offerings. For blockchain and cryptocurrency entrepreneurs the path forward is complicated by the legal and regulatory issues.
Luckily, attorneys like Katya Fisher are well-versed in legal matters associated with blockchain and cryptocurrency and can help both blockchain start-ups and established tech companies answer some of their most pressing questions. Katya has earned degrees from New York University and Benjamin N. Cardozo School of Law and was recently named a Partner and Practice Group Leader, Blockchain, Digital Assets and Technology Transactions at Greenspoon Marder. Having been selected to Super Lawyers as a “Rising Star” in Corporate Law six years in a row, Katya Fisher specializes in technology and innovation. We have been running into Katya at a variety of blockchain, fintech, and cryptocurrency focused conferences at which she is a frequent speaker and finally had a chance to sit down and discuss.
Katya, how has your background shaped what you do today? Have you always gravitated towards technology?
I have always been fascinated by how technology brings people together. I remember discovering message boards on Prodigy, one of the first generation dialup online service providers, in the early 90’s. After that, I was hooked! The ability to make connections with people I never would have met otherwise has been a defining aspect of my life ever since.
What makes you passionate about blockchain technology and cryptocurrency?
The Satoshi White Paper is a masterpiece. A peer-to-peer system that eliminates double spending with no trusted third party. Brilliant.
No matter what the future holds for cryptocurrency, there is no denying the fact that it has inspired a generation of people to question the world and institutions by which we live. What is money? What is value? Why does one have to meet accreditation standards in order to invest in a startup, but not to purchase lottery tickets? Financial education is reserved for a select few and should be available to all.
Beyond that, I am passionate about the ways in which the underlying technology might create all kinds of new opportunities around the world. I am excited to be a part of that and I also hope to play a role, however small, in ensuring that these technologies are adopted in an ethical and compliant manner, while also working with regulators to guarantee that innovation is encouraged and not stifled.
In your new role at Greenspoon Marder, what kind of clients and transactions will you handle?
I will be working with technology companies; issuers of security token offerings (STOs); investment vehicles that focus on digital assets; enterprise clients implementing blockchain solutions, to name a few. Personally I advise quite a bit on corporate and international matters (structuring, IP licensing, taxation). We are a full service, national law firm and the blockchain practice group includes attorneys with a wide range of expertise in securities law as well as real estate, finance, corporate law, and litigation.
What legal issues in the blockchain and cryptocurrency space do you see at the forefront of media and practitioners’ attention?
There are lots of critical regulatory issues in the US and globally. A big one is related to securities regulation and how the SEC is viewing offerings of cryptocurrency and tokens.
The emerging cryptocurrency space has been left to its own devices for a while. Around 2015-2017, the promoters of ICOs were crowdfunding without paying careful attention to securities regulations or with the belief that such regulations were inapplicable.
Finally, about a year ago, the SEC started enforcing compliance with existing securities laws, making it clear that those who offer tokens have to play by the rules.
A common exemption is Regulation 506(c). An offering may be made on a wide scale, but only to so-called accredited investors who meet minimum requirements with respect to net worth. There are other exemptions available, some of which were introduced not
Securities offerings in the United States are subject to registration requirements (commonly known as IPOs). There are exemptions from registration and these are known as private offerings.
too long ago via the JOBS Act, as an attempt to create more inclusivity in the financial markets. They allow for crowdfunding from the general population, under limited circumstances and as long as certain requirements are met. The industry has matured tremendously over the past year and token issuers overall are working diligently to maintain regulatory compliance.
The problem, unfortunately, is that current regulations aren’t quite a perfect fit for the industry’s vision. Take, for example, the security vs. utility issue. Can a token be both simultaneously and still be compliant? As of today, probably not.
What do you think about privacy in connection with this new growing industry? Should blockchain transactions be publicly revealed? What about the fundamental human rights involved?
Blockchain tech is meant to be immutable. It is meant to have a record of information that cannot be tampered with. What information is subsequently stored on the blockchain is up to us. Whether or not information is encrypted in such a way that the information itself is maintained privately depends on the specific technology and project. It is possible to have information that maintains its privacy, which is very important for certain industries like financial services or healthcare, where there are certain privacy concerns that need to be addressed in order for the tech to be viable. Just because the information is on the blockchain does not mean it is completely transparent for all.
We do not really have privacy laws in the US. We have an amalgamation of different laws and regulations – both state and federal – that creates a patchwork of how we work through these issues. Europe has the EU General Data Protection Regulation (GDPR), which has an enormous effect on American business, since we live in a globalized society. Certain GDPR issues are very important for American companies to consider. A famous clause is the right to be forgotten. The GDPR established the right of individuals to demand that their information be scrubbed from the internet in order to protect their personal privacy and other human rights. This creates a potential headache for companies, especially those who use third parties, such as cloud services, for example, but this also is important for certain industries that have to adhere to the US regulations. For example, when you take a look at the financial services industry, the Bank Secrecy Act has very strict requirements about the retention of records. Banks have to retain certain records for a minimum of five years. Therefore, in the financial services industry, you have this direct conflict between the GDPR and the US regulations, making it necessary to consult with an attorney on how to manage those interests in a compliant way that satisfies both ends of the spectrum.
Which countries are advancing the most interesting blockchain and cryptocurrency related regulatory solutions?
Blockchain tech is vast – it’s like talking about regulating the internet. There are so many different regulatory issues here on the securities side, taxation side, IP protection side, anti-money laundering side, international trade, and more. Something that has been very interesting to watch is how different countries address these issues. We have seen Switzerland emerge as a cryptocurrency leader. Its Crypto Valley has a lot of blockchain and cryptocurrency companies registered there. Swiss version of the SEC – FINMA- has been able to classify tokens in three different ways – as a security, as a payment instrument, and as a utility. This is in contrast with how things have been developing in the US.
Since blockchain technology is evolving, do you feel that you need other expertise in addition to legal? Financial? Tech? How do you ensure that you stay ahead of the game?
I try to surround myself with people who are smarter than I am, and build lasting relationships. This includes other attorneys, technologists, financial and regulatory experts. If I don’t have an answer, I usually know someone who just might.
Would you accept cryptocurrency as payment for your services?
The firm does not accept cryptocurrency as a payment yet, although we may in the future. I do not believe we would accept cryptocurrency as payment in trust (held on a client’s behalf), however, because of fluctuations in value – we want to support our clients but we maintain strict adherence to ethics at all times.
Interviewed by Maria Birger