Addison Cameron-Huff, Blockchain Lawyer

In BC, an expert panel commissioned by the provincial government has estimated that $5.3 billion/year is laundered through real estate transactions (pg. 54): https://news.gov.bc.ca/files/Combatting_Money_Laundering_Report.pdf. Even if every single cryptocurrency trade in Canada was done by criminals for the purpose of money laundering, it wouldn't come close to the scale of money laundering in BC, in one year, using real estate.

For years now I've been on panels where people bring up money laundering using cryptocurrency (always without evidence). To the extent that anyone took this idea seriously, they've apparently been looking in the wrong place. I hope that this new research about money laundering helps refocus Canadian regulators' attention on the boring, old-fashioned reality of financial crimes in Canada, and around the world.

On March 14th of this year, the Canadian Securities Administrators and a national non-profit funded by investment industry dealers and marketplaces, IIROC, put out a consultation paper for the regulation of crypto asset marketplaces. The paper is titled "Consultation Paper 21-402: Proposed Framework for Crypto-Asset Trading Platforms" and it asks 22 questions about how the industry should be regulated. Many people have written about this and will be submitting comments to the CSA, but this blog post looks at what assumptions exist in the consultation itself. I will leave answering the questions posed by the consultation to other smart people in the field who are working on this.

This is a complicated topic that deserves a much more comprehensive discussion, but I hope that this article about assumptions will help others who are responding to the CSA/IIROC before the May 15th deadline.

Toronto Blockchain Week was a huge success last week. We managed to rally our vibrant, diverse community of educators, businesspeople, developers, government, and the public, to attend 47 different events across Toronto. Thousands of people attended the week's events, and I was impressed by the calibre of the events I attended (unfortunately there were so many that I only attended about a third of them). Here are just a few of the organizations that ran/helped run events last week:

The Creative Destruction Lab, located at U of T's Rotman School of Management, has launched a blockchain-focused incubator program. The program offers mentorship and (up to) $100k USD of investment, in exchange for an equity stake.

The Ontario Securities Commission (OSC) released its decision to refuse to issue a receipt for a proposed NRIF (see below) investment product called "The Bitcoin Fund" last month. The fund is being put forward by the tenacious team at 3iQ Corp., who on Friday filed an application requesting a hearing about the refusal. The application contains further details about their plans, including the role of Gemini Trust Company, a US trust company, that they intend to act as a sub-custodian to Cidel Trust Company, a Canadian trust company.

3iQ has been trying to establish this fund in Canada since at least 2016 (according to their application). For anyone interested in following in their footsteps, their 26 page filing is required reading. The investment managers (and their lawyers) have put a lot of thought into these issues, and they've included operational details in the application that are interesting notes about the state of the industry in Q1 2019. For example, paragraphs 38-49 discuss their proposed Bitcoin valuation methodology and why, in their view, it conforms to NI 81-106.

Legal platforms like Clio have brought large firm tools to small firm/sole practitioners, and greatly improved the toolkit available to lawyers. What these platforms don't offer, and what almost all online platforms (e.g. Facebook) don't offer, is local encryption (explained below). The current way of doing things is that lawyers are uploading important information about their clients to systems that they don't control, and that disclosure is often not mentioned in lawyers' retainer agreements. How does this interact with the rules for lawyers, such as the rules for confidentiality in Ontario? How should lawyers be safeguarding client information? The rest of this blog post talks about one possible way of addressing confidentiality in the era of cloud software tools for lawyers.

Toronto will be celebrating Toronto Blockchain Week (TBW) from April 22nd till 28th. The website for TBW is https://www.torontoblockchainweek.io and the reaction to its launch last week has been very positive. Toronto has a lot to effort to the nascent blockchain industry.

The most common question I've heard from clients over the last five years of working with the crypto industry in Canada is: “How does my company get a bank account?”

One of the reasons why it's so hard to get a bank account for a cryptocurrency-related company is the prevalence in Canada of stolen payment credentials (debit/credit card information). Most people who I ask about this crime says it's happened to them. In a study by Canada's Chartered Professional Accountants, approximately 1/3 of Canadians said they'd been a victim of this crime. The rest of this blog post will explain how this commonplace crime is connected to the difficulties that companies have had in opening business bank accounts in the virtual currency (cryptocurrency) space.

Many concepts sound great in theory but become thorny in practice. One of those concepts is the idea of the "public interest". The term has existed as a principle for good government, in various forms, for thousands of years and it's widely used in law. In a recent blog post, a well-known Ethereum developer implicitly put forward the idea that public blockchains ought to be run in the "public interest". But what does the term mean and is that a standard that ought to be at the heart of Ethereum, or any other public blockchain? It's a concept that's widely used in law. Why not for Ethereum?

The term "public interest" appears in ethical guides, statutes, and administrative law textbooks all over the world. But this simple term hides a complicated reality. Few people agree on what the "public interest" is, how to identfiy it, or how to know when something isn't in the public interest. This is a standard that opens the door to debate, rather than providing a standard in the sense of Ethereum's ERC-20, technical standards, or really anything that programmers would say is a "standard". What lawyers and regulators call a "standard" might surprise people who are not familiar with the thousands of pages of scholarship on various sorts of "standards" in law (e.g. Canadian administrative law).

Toronto has an impressive and growing group of legal professionals who work in the blockchain space. This blog post is an attempt to list the people and their areas of focus (see the end of the table for the inclusion criteria and disclaimers).

Canadian company Dapper Labs Inc. has a new license to share with the world: version 2 of the "NFT License". This license relates to a special kind of Ethereum "token" pioneered by the company using their popular game/marketplace: CryptoKitties (further information here).

Who runs Ethereum? Who's accountable for what happens on the Ethereum network? This is the first in a series of blog posts exploring this topic.

The UK's financial industry regulatory body, the Financial Conduct Authority, is consulting on "cryptoasset" regulation until April. They've issued a document that contains their views on various aspects of the industry and how they might be regulated.

I've started a new law practice that's 100% dedicated to serving the blockchain/crypto market. The launch was been covered on Friday by Bitcoin Magazine: https://bitcoinmagazine.com/articles/canadas-first-all-crypto-legal-firm-opens-its-doors-to-global-clientele/. The firm was officially opened on the 10th anniversary of the Bitcoin genesis block, January 3rd, 2019. I'm excited to be able to work full-time in this industry as cryptocurrency enters its second decade.

From 2013-2017 I ran a technology law practice that slowly transformed into a cryptocurrency-focused law practice. The law practice was very successful, serving around 150 clients, primarily located in Ontario. But it was a bit too busy. In the fall of 2018 I was faced with the choice of either expanding my practice (i.e. hiring associates or adding partners), joining a larger firm, or doing something more radical. Around this time one of my key clients, Ethereum co-founder Anthony Di Iorio, expressed an interest in having me change my role from outside counsel to inside counsel. In 2017 Anthony made me an offer to join Decentral Inc., his main corporation, as its Chief Legal Officer. Within two months I was promoted to President and took on a general management role.

My last blog post was in August, 2017. The reason why there hasn't been other posts since then is that I became the President of Decentral Inc.

At Decentral I led the development of a next generation cryptocurrency wallet (jaxx.io) and many other exciting projects. I built up the company to 35 employees, increased revenue by millions of dollars a year, released a major new platform, and helped nearly a million people around the world to interact with their cryptocurrency. I didn't have time for personal blogging.

Last week the CSA published a staff notice on ICOs (token crowd sales) and cryptocurrency funds. This week my thoughts on that staff notice were published in Bitcoin Magazine: https://bitcoinmagazine.com/articles/op-ed-planning-ico-canada-here-are-10-regulatory-points-ponder/.

The actual staff notice, titled “CSA Staff Notice 46-307 Cryptocurrency Offerings” can be read here.

In an hour I'll be speaking on a panel at the Bitcoin & Ethereum Summit. The topic for the panel is ICO vs. VC. As a prelude to the talk, here's a table that compares venture capital (VC) investment with initial token offerings (ITO)/initial coin offerings (ICO) sales:

A model American state law for virtual currency businesses was approved last week by the National Conference of Commissioners of Uniform State Laws: “UNIFORM REGULATION OF VIRTUAL CURRENCY BUSINESSES ACT”.

I hope that this model law is not used as inspiration for regulatory efforts in Canada. This blog post explains why.

The US Securities and Exchange Commission has published a long report on the “The DAO” that contains an an analysis of the application of US securities laws to token sales/ICOs.

Surprisingly, they decided not to proceed with an enforcement action against anyone involved in The DAO. The full report can be read here: https://www.sec.gov/litigation/investreport/34-81207.pdf.

On March 20th Donald Johnston (Aird & Berlis) and I ran an event with OsgoodePD titled “Critical and Emerging Issues in Blockchain Law”. This is my recap of what was covered.