Blockchain Law Evolves: Feature Interview With Jason Weinstein
As a partner with the Washington D.C. office of Steptoe & Johnson LLP, Jason Weinstein has enjoyed a busy career as a litigator, focusing on white-collar defense and government investigations pertaining to privacy, cybersecurity, and financial technologies. He is a former deputy assistant attorney general in the Criminal Division of the U.S. Department of Justice, serving as lead counsel in many jury trials.
Weinstein is also a sought-out expert among various industries seeking advice on cybersecurity risks and cyber-attacks. Here he provides crisis management support as well as litigation and regulatory proceedings defense pre and post security breaches.
Amid rapid shifts in today’s tech milieu, he and his legal partner Alan Cohn are now actively involved with a niche legal practice at Steptoe & Johnson addressing issues tied to Blockchain technologies. Below is our interview with Weinstein on the evolving nature of this legal landscape and what it portends for blockchain’s future trajectory.
On legal practice formation…
“Our blockchain practice at Steptoe actually started about two and a half years ago. During that time, we’ve represented companies from virtually every part of the bitcoin ecosystem. But now we’re expanding the practice — taking the next step from being counsel to the bitcoin and blockchain industry, to being counsel to companies across all industries who will be affected by the many applications for blockchain and distributed ledger technology.”
On developing a blockchain niche expertise…
“At Steptoe, we developed a blockchain expertise through our work with bitcoin and blockchain companies, and through our previous experience in government. Over the past two and a half years, Steptoe has advised just about every type of participant in the blockchain ecosystem; including investors, entrepreneurs, early stage companies, exchanges, transaction processors, and retailers.”
“During this time, we’ve helped lead efforts to spread the word about the almost limitless possible applications for blockchain technology. We serve as an advisor to both Coin Center and the Chamber of Digital Commerce, two of the industry’s leading advocacy groups, and I’ve had the pleasure of serving on the advisory board of BitFury. And in 2015, I had the honor of being at the first-ever ‘Blockchain Summit’ hosted by Sir Richard Branson on Necker Island, an event that my law partner Alan was invited to speak at this year.”
On co-founding the Blockchain Alliance…
“In October 2015, along with the Chamber of Digital Commerce and Coin Center, Steptoe co-founded the Blockchain Alliance, a coalition of blockchain companies and law enforcement and regulatory agencies. The Blockchain Alliance is an industry-driven effort to promote the growth of the industry and protect public safety by educating enforcement agencies about digital currencies and the blockchain, and helping combat criminal activity involving this technology.”
“Since its launch, the coalition has rapidly expanded and now is comprised of more than two dozen companies and two dozen law enforcement and regulatory entities around the world, including Europol and Interpol. Among other activities, Steptoe and the Blockchain Alliance have conducted educational programs for more than 400 law enforcement officers and regulators from more than 15 countries. Steptoe also serves as counsel to the Alliance where I serve as its director.”
On the future of blockchain and distributed ledger technology…
“We see it as being as important to the future as the internet is today. In essence, the blockchain is the internet of value, and enabling transactions of value in the same way that we currently exchange communications and data enables not only advances in value transfer but also helps unlock the potential of other innovations like the Internet of Things. For those who believe that the benefits of blockchain and distributed ledger technology are still many years away, we would point to the growth of the commercial internet in the early 1990s, which seemed uncertain at first, suffered its share of setbacks, was left for dead several times, and ended up changing the world in ways we are still coming to understand.”
“So too it will be with respect to blockchain and distributed ledger technology. Essentially, we are today where we were with the development of commercial applications for the internet 20 years ago… the difference is that this time, we can see it coming. The firm made the decision to expand its practice now for this reason.”
On prevailing legal issues currently facing the Bitcoin/Blockchain community?
“There are fascinating issues all across the Bitcoin/Blockchain ecosystem. However, as my legal partner Alan likes to say, many of these questions fall under the general heading of ‘How will the existing legal, regulatory, policy regime governing [insert industry] be applied, or need to adjust, to account for the adoption of blockchain technology?'”
“So, for example, some of the most interesting questions today surround the use of smart contracts. In the insurance area, for example, how will current legal concepts such as drawing presumptions against the drafter apply to smart contracts for insurance? How will concepts such as “occurrence” or “covered event” be interpreted if a party advocates for an interpretation that is different than what is programmed into the code? ”
“Second, there are fascinating questions involving how current legal regimes apply to both on-blockchain and off-blockchain activities undertaken through virtual currency exchanges. Steptoe recently filed a petition with the Commodity Futures Trading Commission urging the agency to engage in a rulemaking effort to determine what constitutes “actual delivery” for virtual currencies traded on exchanges, rather than using the enforcement process to reach these decisions. Finally, DAO token trading raises other interesting issues concerning how these kinds of tokens should be interpreted for the purposes of legal and regulatory regimes governing securities, commodities, and currencies.”
On anti-money laundering regulations and compliance…
“For bitcoin and other virtual currencies, there are definitely questions relating to these areas: what constitutes the standard of care and sound risk management activities; how will different regimes apply to transactions involving different types of virtual currencies; and how will regulatory regimes need to change to adapt to virtual currencies. In essence, each new development in the Bitcoin/Blockchain ecosystem brings with it new and novel legal questions.”
On emerging bitcoin/blockchain related legal trends over the next 12-18 months?
“There are some very exciting blockchain applications on the horizon, impacting everything from smart contracts to financial services to energy to insurance to transportation to IP rights management to the Internet of Things, involving the public (Bitcoin) blockchain, private or permissioned blockchains, and hybrids that make use of both. All of these areas will present challenging legal, regulatory, and strategic questions for businesses.”