Keep up with Security Token Academy: securitytokenacademy.com
The Security Token Academy hosted the first Security Token LA meetup in Santa Monica on August 16th, 2018. Our host and legal expert Amy Wan sat down with blockchain lawyer Morvareed Salehpour to discuss some of the hurdles that face companies utilizing the blockchain and why the world will follow the U.S. when it comes to the security token industry.
Featuring:
Amy Wan, Security Token Academy
Morvareed Salehpour, Managing Partner, Salehpour Legal Consulting
TRANSCRIPTION
hi I’m Amy Wong with security token
Academy and I’m here with Marbury salla
for all right so you’re a blockchain
attorney so in terms of what you’ve seen
or legal hurdles you know what does the
landscape look like I think there’s a
couple issues that are now starting to
develop one of the most interesting
issues in my opinion is issues with when
things go wrong on a blockchain so
there’s issues with regard to
jurisdiction
what court are you gonna sue in what
country because it could be the
situation where when something goes
wrong every single place there is a node
is a point of liability so all of a
sudden you could be subject to
conflicting laws across different
nations so you kind of have to set
yourself in a position where have a good
argument in terms of where you’re liable
similarly there’s issues with
enforcement because where are you going
to enforce an order even if you’re able
to get that from a court where you don’t
the court doesn’t have jurisdiction over
people who are members of this public
blockchain and are decentralized across
the world and there’s similar issues
with anything even hold liable because a
lot of transactions will involve people
you may not be able to pinpoint because
of the decentralized nature of the
blockchain so these are all a lot of
really neat novel legal issues what’s
the solution gonna be how are you gonna
grapple with these things or are we
going to see maybe the emergence of new
legal infrastructure I think one of the
big issues is going to be that it’s
going to start evolving
in courts and you will see new decisions
coming down like there’s already a
decision or a case that’s pending in New
York where someone has asked for a
court-ordered rescue fork and that’s
something some of these issues will be
resolved when a decision is made in that
case but the way to kind of protect
yourself right now is to get an attorney
who has knowledge about the space
involved in coding the smart contracts
for kind of giving you advice and making
sure your smart contracts are
appropriately set up to anticipate some
of these issues so that you have set
yourself up for a strong argument when
you do you know come up with issues
regarding liability enforcement in
jurisdictions so that brings up a very
interesting point you know there are a
lot of purported blockchain attorneys
now what should they be doing or
thinking about to make sure that they
are adequately protecting their client I
think they need to actually understand
the space and the issues that are coming
up I think a lot of focus right now is
on securities law which is a very
limited focus and the innovation that’s
going on in blockchain has more
widespread effects and will actually
cause just changes in how our legal
structure works and how our cases are
decided because we all have to come up
with ways to resolve the issues that are
common to a decentralized system and
that’s something we’re not really
prepared to address right now because
we’re used to centralized system so we
do need to get creative and use past
precedent in a creative way to get our
clients where they need to be really
interesting well let’s talk for a second
about securities laws and regulations
and tokenization do you think we have
enough regulation not a
or what what needs to change in order
for this industry to to move forward in
a responsible fashion I think one of the
things that needs to happen is that we
need new regulations that are block
change companies specific so one of the
things that I’m really interested in and
I think it’s a good idea is there’s a
virtual currency digital currency act
and that is a proposal by the you know
the common laws that society and it has
basically the same organization that
proposed the UCC and the states adopted
has now basically proposed this law and
the ABA is on board now and it will
sterilize money transmission licensing
rules across the state so that you
companies that are in the blockchain
space don’t have to comply with 50
different laws but will only have one
law that they need to comply with and
it’s specific to them so that there are
exemptions for blockchain companies so
that they are not unnecessarily covered
little purposes of Licensing because as
it is right now they may be subject to
licensing even if they’re just
researchers that are transmitting points
yeah that’s really interesting you know
the security token industry right now it
seems to be primarily based in the US
the rest of the world is still on this
thing about you tony tokens and things
like that
what gives is do you think you know the
security token industry is going to be
it and the rest of the world will move
that way or are we gonna have two
different paradigms well I believe it’s
all going to kind of follow the u.s. I
think we’ve always been the leader in a
lot of laws and regulations
I feel other countries are starting to
follow us there’s already a couple
countries I believe it was Switzerland
was starting to say basically there it’s
a security I think the UK is also come
out recently supporting that kind of
classification so I think it’s all going
to start falling in line and there will
only be loopholes left for so long right
now i ciose and
Tio’s and and all these token sale
offerings they are still going around
and you know incorporating in crazy
jurisdictions jurisdiction shopping in
the Caymans and Malta and you know you
name it
do you have any thoughts about that is
that trend going to continue I think it
may in the short term and I also think
that they should realize that the fact
that you are purposely going out and
trying to form shop does not mean that
the SEC won’t come after you if you’re
still engaging in business in the US and
you saw effects in the u.s. that’s all
changing and they se can come out at any
point say well you’re really operating
business in the u.s. your funds are
coming in here so we’re going to come
after you how do you think the practice
of law might change due to blockchain
with distributed ledger technology I
think it’s we you know lawyers are just
going to have to understand coding more
I think smart contracts are gonna be
something where it’s gonna have to
involve the lawyers and the developers
working together so I think that’s gonna
be a lot more technological innovation
that lawyers need to understand and they
really have to understand how that works
on but how a blockchain really works on
the technical mode very interesting
thank you so much for joining us
I’m Amy one from security token Academy
thank you for having me