Coinbase Inc.'s recently announced hire of a senior Facebook Inc. lawyer has shone a spotlight on the busy job market for in-house counsel at digital currency companies as the industry gains legitimacy with financial institutions and regulators.
Digital currency exchange Coinbase announced on July 8 that Paul Grewal would be its new chief legal officer. Previously, Grewal served as Facebook’s deputy general counsel after nearly six years as a federal judge in California.
Grewal’s move is the most recent of a series of prominent in-house hires in the digital currency space. Some in the industry say this is a sign that crypto is gaining wider acceptance and that legal department hiring in the area will continue heating up.
“It sends a twofold message,” Marco Santori, CLO of cryptocurrency exchange Kraken Digital Asset Exchange, said of the string of hires. “One, that crypto companies are serious about compliance and that they are serious about achieving parity with the traditional finance system on the world regulatory stage. It also signals to the world that crypto companies are serious about participating in the international discourse around the development of crypto law.”
Santori himself was a recent hire in the field, joining Kraken in April after serving as CLO for crypto exchange Blockchain.com and working at Cooley and Pillsbury Winthrop Shaw Pittman.
Despite the coronavirus pandemic, he said new user registrations on Kraken have increased and he plans on doubling the size of the company’s legal team in the next year.
Cryptocurrency exchange companies face legal challenges such as compliance with standards set by dozens of regulatory agencies around the world and identification problems that are inherent to decentralized blockchain technology.
“I have seen a huge increase in the number of legal professionals who are focusing on the digital asset space and blockchain technology,” said Stacey Hoisak in an email to Bloomberg Law. Hoisak joined Canadian crypto exchange firm Coinsquare Ltd. as chief privacy officer in January. “It’s a wonderful mixture of technology, finance, capital markets and innovation, and it’s a great industry to practice in.”
No ‘Gray Market’
Since the introduction of popular cryptocurrency Bitcoin in 2009, digital currencies have made large strides towards institutionalization making the space more inviting for attorneys.
Investment bank JPMorgan Chase & Co. took on cryptocurrency exchangesCoinbase and Gemini Trust Co. as clients in May, and multiple states have taken steps to better regulate the industry. Coinbase is also expected to become the first cryptocurrency startup to go public, according to several news reports.
“Crypto’s been normalized in the last few years. It’s not as scary as it once was, so it doesn’t really surprise us when people come to the dark side, so to speak,” said Nic Carter, a partner at blockchain-focused investment company Castle Island Ventures.
That’s exactly what Jeff Ifrah, the founder of Ifrah Law PLLC who specializes in cryptocurrency and blockchain, wants to see.
“In order to succeed, they need to bring on talent like former federal judges. They can’t afford the continued reputation of operating in the shadows like some sort of gray market,” Ifrah said.
Despite digital currencies’ moves toward the mainstream, federal and state regulators are still working on clarifying relevant legal frameworks.
“We need smart regulation that both recognizes and fosters the potential of this technology,” said Stuart Alderoty, general counsel of blockchain payments company Ripple, in an email to Bloomberg Law. “Regulation that is principles based, which means regulation that is flexible enough that it doesn’t smother the innovation while protecting the integrity of the markets and consumers.”
Alderoty said laws for the crypto industry are still being written, making this industry the “cutting-edge” of today’s legal issues.
Santori believes this makes crypto an attractive industry for lawyers who “enjoy an intellectual challenge.”
“There are very few areas of the law where not only precedent is lacking, but the risks are different, the tech is different, the people involved are different, the jurisdiction is different — literally everything is new in crypto law,” Santori said. “Crypto is the absolute most interesting place to practice law for any lawyer anywhere in any legal discipline.”
Beyond Grewal, here are a few of the most notable in-house hires in the digital currency and blockchain industries over the last few years:
- Oksana Davis, former legal counsel and corporate secretary at technology advocacy group AirFuel Alliance, joined blockchain company Enterprise Ethereum Alliance as CLO and corporate secretary in January 2018.
- Stuart Alderoty left a decades-long career in financial services, most recently with CIT Group Inc., to join Ripple as general counsel in January 2019.
- Coinsquare Ltd. brought on Stacey Hoisak as chief privacy officer and corporate secretary in January 2020. Hoisak previously served as general counsel at digital health company Klick Health.
- Payward, Inc., parent of crypto exchange Kraken, hired Marco Santori as its new CLO in April 2020.
- Jamey Seely, formerly general counsel of the Gates Corporation, joined blockchain company Integra Ledge as president and general counsel in April 2020.
- Robert Werner, former director of the Financial Crimes Enforcement Network (FinCEN) became the Libra Association’s first general counsel in May 2020. The Libra Association, based in Switzerland, manages Facebook’s cryptocurrency Libra.