In this opinion piece, he explains why his profession should play a critical role within the growth and maturation of the ICO market.
Recently, I began to research the terms of varied initial coin offerings (ICOs), aggregate the results and make them public. This was harder than I expected.
It seems that fairly often ICO terms and conditions aren’t publicly available immediately after the token sale is completed. this is often true even within the case of a number of the foremost successful, very prominent ICOs. A token holder cannot even read the terms unless he or she remembered to save lots of them on a tough drive during the ICO.
This is but one example of a typical that i feel most folks would like to not take hold within the market. And it underscores the necessity for more engaged lawyers, openness towards clear communication of legal topics and more legally aware entrepreneurs during a promising but fraught young industry.
The old world is watching
It’s hard to stay up with ICOs, with quite 100 such sales completed thus far this year, raking in overflow $1 billion, consistent with CoinDesk’s ICO Tracker. But it’s not almost the surge of funds raised through token sales. One sign pointing to the growing maturity of this market is that the interest it receives from the old world.
By “old world,” I mean mainstream institutions and firms, also as their representatives. While previously cryptocurrencies and various blockchain applications even have stimulated tons of hype (e.g. among banks), it seems that tokens and ICOs have triggered another large wave of interest.
Venture capital is simply one example of that. Within a year, ICOs and tokens became one among the main topics within the industry. a rather different example is regulators, who have issued a series of positions in several important jurisdictions in recent weeks.
Additionally, there’s also another group within the old world experiencing a growing fascination with ICOs: lawyers. The trend are often measured by the unbelievable number of latest legal publications, the opening of blockchain practices and departments in numerous law firms, the amount of lawyers who include the word “blockchain” in their LinkedIn profiles, and so on.
This went on for a minimum of a couple of reasons, the primary being that blockchain by itself may be a captivating subject for lawyers; the concept of smart contracts, for instance .
But there’s also a really practical reason why lawyers want to affect tokens and ICOs: it’s a replacement marketplace for their services. While still a distinct segment subject of experience , there’s serious money involved and large potential for continued growth.
There is also an enormous demand for legal services. Legal support is typically needed altogether major transactions, but within the case of ICOs, this is often particularly important because the demand for lawyers is fueled by legal uncertainty and regulators’ approaches.
Any lawyer who’s addressed blockchain issues knows that legal uncertainty is nothing new here. But within the case of ICOs, it’s become particularly evident.
Now, after the announcement of regulator positions in some major jurisdictions (the U.S. and China included), it’s going to seem that the regulatory situation is beginning to become much clearer. And during a way it’s .
But once we check out the small print , fairly often the overall conclusion is that “tokens might or won’t be securities.” Not very edifying, is it?
I don’t judge the regulators here. It’s not new that a general, functional approach is being applied to complex, unprecedented technologies that aren’t specifically regulated.
I just want to underline that, so far, the “case-by-case” approach dominates – you’ve got to conduct an in depth legal analysis of an ICO and its underlying tokens, and so on, in each individual case, and sometimes seek a dialogue with the regulators.
In practice, the case-by-case approach means you would like to involve lawyers in each case. Good for lawyers, but not necessarily for entrepreneurs.
Lawyers shouldn’t , however, just rest on their laurels.
In the ICO market, we’d like to develop legal standards. My anecdote about searching vainly for legal documentation for ICOs may be a stark illustration of this. Who should craft these standards, if not lawyers?
Without such standards, the ICO market might never really begin . Despite technological development, entrepreneurs could be stuck in swamp of legal uncertainty. Developing those standards requires good legal analysis that goes beyond a specific use case, but also a willingness to share knowledge, cooperate with competitors (which pays off over the long term) and sometimes spend unbillable hours on community work.
Many lawyers already do this job well.
But this development won’t happen without strong cooperation between lawyers and market participants. After all, legal standards are just a subset of market standards. The lawyers’ work won’t make much sense beyond particular business cases if entrepreneurs aren’t hospitable speaking about legal aspects of their business openly.
The market also needs lawyers to effectively ask policymakers.
Lawyers are well-suited to becoming transmitters of know-how from the market to lawmakers and regulators. they ought to clearly define market needs and regulatory issues, educating policymakers and proposing appropriate regulations.
This goes well beyond lobbying activity and will preferably be perceived as community development work.