Cryptocurrency
Cryptocurrencies
In recent years, the rapid growth of cryptocurrencies such as Bitcoin and Ethereum and the advancements that they have brought to both technology and market dynamics has resulted in a range of complex and unprecedented legal developments.
These fast-moving changes pose challenges for organisations, requiring them to understand and stay ahead of new regulatory requirements, data security measures, and intellectual property considerations to ensure compliance and mitigate risks.
Our expertise
Our IT lawyers are dedicated to providing your organisation with practical and strategic advice to navigate the complexities of cryptocurrencies. We can help ensure your compliance with evolving laws and implement robust measures to protect your digital assets.
We can provide expert guidance on areas include data security, intellectual property rights, and compliance with evolving regulations. We can support your organisation in mitigating risks and leverage the full potential of cryptocurrencies.
A short introduction to cryptocurrencies:
Cryptocurrencies (or 'crypto') is a digital currency that relies on an encrypted network to:
- Execute
- Verify
- Record
Cryptocurrencies act independently of a centralised authority such as a government or bank.
These digital currencies operate on Blockchain technology, ensuring that transactions are:
- Secure
- Transparent
- Immutable
The decentralised nature of cryptocurrencies allows for peer-to-peer transactions without the need for intermediaries, making the process both more efficient and cost-effective.
Cryptocurrencies: practical considerations
Organisations that are using or are considering the use of cryptocurrencies should be aware of several practical considerations, both from a legal and commercial perspective:
Commercial considerations
Market volatility
- Cryptocurrencies, like other investments, are highly volatile – with the potential to fluctuate in value in short periods of time
- Organisations should therefore exercise caution and take care when interacting in these kinds of markets, ensuring that they have risk management processes in place
Integration
- As cryptocurrencies are a form of digital asset, organisations should ensure that both their existing financial and operational systems can integrate and handle cryptocurrency transactions
- Investing in technology and training will help organisations
Security
- Cryptocurrencies are open to risk of hacking and fraud (particularly identity theft)
- Organisations should therefore be taking steps to implement robust security measures to protect their digital assets
Legal considerations
Contractual issues and disputes
- The volatility of crypto assets can create significant challenges for English courts when determining the valuation date for damages. Due to unpredictable fluctuations in the value of cryptocurrencies, establishing a fair and accurate valuation at a specific point in time becomes complex, potentially leading to disputes and inconsistencies in damage assessments
Data privacy
- Organisations should ensure compliance with UK data protection law (and any other relevant data privacy regulations) when handling personal data in cryptocurrency transactions
Regulatory compliance
- Organisations will need to ensure compliance with local and international regulations governing the use of cryptocurrencies, given the high risk of money laundering. This includes anti-money laundering (AML) and know your customer (KYC) requirements
- Organisations should also look to develop internal staff knowledge and expertise surrounding crypto assets to identify high-risk clients or activities and conduct appropriate due diligence on key individuals in client businesses
Meet our team
Jaskeerat Sanghera
Managing Associate
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