CryptoFriends talk law and blockchain with Founder of CryptoLaw Partners, Gordon Einstein in Malta, the “Blockchain Island”
Blockchain technology, a term that has received quite a lot of attention over the last few years in the mainstream media, has also increasingly raised questions within national and international law. Considered as the “technological revolution” of our century, its use is being explored across many sectors as a more reliable way to verify information, record ownership, automate contract processes and allow instant money transfers.
However, such major developments, ones that have the capability to totally transform existing systems, comes the need to regulate in order to ensure safety for consumers and users. It has also become evident that as blockchain is such a new topic of interest, governments are yet to completely understand its impact and are struggling to clearly define ways to regulate it.
Armen Andonian, Head of Communications for CryptoFriends sat down with Gordon Einstein, Founder of CryptoLaw Partners to talk about how blockchain and law fit together, and how law must adapt to accommodate blockchain in the future.
AA: Nice to meet you here on the blockchain Island of Malta, Gordon. Can you tell us a little bit about how you got started in blockchain and cryptocurrency?
GE: Sure it was actually a wild coincidence. I have a cloud computing company that provides a remote desktop for law firms — AdaptiveSky. We were exhibiting in New York, and this couple that I didn’t know were in the booth next to ours. It turned out that they own the biggest development house in Ukraine for blockchain. Because of their hospitality, I ended up going to Ukraine 15 times and I fell in love with crypto and blockchain. And, my love of crypto and blockchain actually made me go back to the law.
AA: A lot of people still don’t really know how blockchain and law go together. You’re obviously working on this. Can you tell us a little bit about your findings and how you think the legal system will apply to blockchain internationally?
GE: So, what’s neat about this area of law is it draws upon several existing areas, but it’s also new law, so it’s a sort of a hybrid beast, which makes it very exciting. The most obvious area of law that it applies to is securities law. Issues such as defining what an investment is and what is not an investment. Also, things like whether it’s ok to solicit outside investors, whether you do it privately, how you handle it, and where you register your offering. That’s a big area. It also inherently touches on banking and money transmitter law. It is the nature of bitcoin and other cryptocurrencies that they are similar to transmittable funds. So, on one hand, you have the banking regulatory structures like anti-money laundering (AML) and know your customer (KYC). On the other hand you have issues like terrorist financing and keeping the transactions out of the hands of criminals.
AA: Yes certainly keeping transactions out of the hands of criminals and away from terrorists must be a priority. There must eventually be strong emphasis on that.
GE: Or now. I say now. I go around the world presenting at great events like this and this is the thing I’m pushing. The thing I’m passionate about is getting the different jurisdictions and different countries of the world to get their laws in alignment and to support this revolution. This is because this revolution can help humanity, and this is my message to the regulators. My message to the people in this space is, yes, the law is changing, and yes, the law is new. BUT, don’t lie, don’t commit fraud, and (for now) comply with the rules, such as they are. Be creative but don’t hurt things — because one bad actor hurts it for the rest of us. I advise a lot of ICOs and I have them comply as if they are securities even if they are not in many cases, just to handle things well. I love this area of law it’s great.
AA: So are you quite optimistic about how blockchain will fit into the world. As in, will there be a legal framework for blockchain internationally?
GE: No doubt. I’d say that blockchain is forcing or promoting something great, which is a “PLANETARY” (emphasis added) commercial law, not even “global”, but “planetary”, something beyond traditional notions of jurisdiction. It interacts with the law but it’s fundamentally beyond the law. I mean you can’t arrest bitcoins and you can’t seize bitcoin’s assets. Bitcoin is not a person, it’s not an organization, it’s not a company- so you can’t really stop it. It’s designed to not be stopped. It’s great that way. I think it’s gotten so big, it’s going to be very hard to stop it. Now there are things beyond bitcoin, but bitcoin is truly decentralized, truly distributed and the law needs to adapt. And, when the law adapts, it will adapt on a planetary basis — which is great.
AA: When we’re talking about the decentralized system, ones spread across the world, the world must move together to create some kind of framework, is that what you mean?
GE: Right, I mean it is the only way that they can possibly influence it. I don’t want them to shut it down, but the only way they can possibly influence it is to address it on a planetary basis. Even if the United States, China, and Russia all got together and said, “we’re going to shut down bitcoin”, I think it would cause a lot of problems for bitcoin and miners, but I don’t think they can really shut it down, not completely.
AA: What do you wish to see with respect to future of cryptocurrency and blockchain and how they will be used in our world? And, how are you working towards this?
GE: I think blockchain and cryptocurrencies are fundamentally good things. I don’t want an unstoppable terrorist machine, I don’t want an unstoppable money laundering machine. I want an unstoppable commerce machine that helps the world. So what I am trying to do is get the different jurisdictions of the world to coordinate their responses in a way that’s productive. And, as you know, Malta is taking the lead on that. To find that someplace like Malta exist where it’s not just a lack of regulation but they are thinking positively about regulation, they are making new laws to enable this, is great because it forces United States, China, and Russia to catch up and change their law, so it’s exciting and you’re a part of it, like CryptoFriends.
AA: My final question is, we are here at the CryptoFriends Birthday party in Malta. Do you have a message for the blockchain island?
GE: Yes! Malta is positioning itself as the center of the revolution. And, there are good people here — and the goodness of the Maltese people only makes me want to explore and support Malta more.
AA: Thank you Gordon, great to chat with you.
GE: Thanks Armen, thanks CryptoFriends.