Blockchain technology, including Bitcoin, presents a number of complex technical challenges to the Australian legal sector and it is important that the profession acts quickly to address these.
Despite effectively being a form of new international currency, Bitcoin remains largely unregulated around the world and has become an obvious ‘go-to’ for the payment of illegal activity in a similar way to the use of cash.
As the usage of Bitcoin increases – banks, legislators, law enforcement agencies, and regulatory authorities all need to adapt. This will require considerable research and investment to modify current systems, protocols and laws.
Lawyers that want to work in this area will need to develop their knowledge and understanding or risk limiting their expertise and practice. To date, only the top-tier law firms have been deploying resources to explore the use of this technology and engage in and influence discussions in the area.
The impact of Bitcoin transcends into our taxation and financial systems and these also need to be re-evaluated and modified. Bitcoin doesn’t necessarily fit into the current system of fiat currencies capable of being traded against each other.
Currently, there is considerable debate about whether blockchain currencies will enter the mainstream. While this remains uncertain, the legal profession still needs to be prepared.
Initial coin offerings now exist to allow investment using cryptocurrencies which presents a new set of challenges. How will this work? What are the rights of investors? What are the tax implications? What happens if the whole thing is a scam?
The biggest challenge, in my view, is that this is such a dynamic and technical area. It brings a multi-faceted convergence of technology and law that is moving fast. For most people involved in the law, this is entirely new and we need to not only know what we’re talking about but also have the appropriate systems in place to regulate this.
This article is sponsored by Vobis Equity Attorneys.