19 Mar 2021

Withers launches crypto podcast to support new blockchain practice

Initiative follows December’s team launch as interest in digital assets grows despite risks

By Roman Edwards

Image courtesy of Withers
Withers corporate partner Charles Kolstad

London-based law firm Withers has launched a podcast series on cryptocurrency in support of its blockchain, cryptocurrency and decentralised finance practice, which it set up last December.

The series – Withers Talks: Cryptocurrency – reflects increasing client interest in the asset as investment continues to rise despite ongoing concerns about its volatility and susceptibility to fraud. The new practice contains around 35 Withers lawyers based across its international network who advise crypto investors, issuers and exchanges.  

In the first episode, So You Are Thinking of Investing in Cryptocurrency?, Withers associate and host Megan Jones is joined by her fellow Los Angeles resident and tax and corporate partner Charles Kolstad and of counsel Joseph Bambara.  

Bambara urges investors to be cautious on grounds that the lack of cryptocurrency regulation allows more room for fraud. “There is a lot of fraud and there has been fraud since the beginning," he says. "Fraudsters in the cryptocurrency space are usually extremely technologically proficient and especially hard to track.” 

The Withers counsel adds that he and other lawyers at the firm are aiding the New York cybercrime team in its investigation into the recent phishing attack on users of MetaMask, a cryptocurrency wallet used to interact with the Ethereum blockchain. 

Users were ensnared through ads on Google that encouraged them to download bogus updates of their wallets which allowed their funds to be accessed. The attack was one of countless scams that have plagued cryptocurrencies, which British MPs described in 2018 as a 'Wild West industry'.

Despite these controversies, 27% of institutional investors in the US hold crypto-assets and 60% of investors across the US and Europe believe digital assets have a place in their investment portfolio, according to a Fidelity study.  

Kolstad, who has advised clients on taxation in the cryptocurrency space since 2013, said regulation of cryptoassets was inevitable. “The thought that there won’t be regulation in the US, Singapore, Korea, Germany, the UK etc. is just wishful thinking. The current classification of cryptocurrency tokens as either registered or unregistered securities by the SEC will probably lead to regulators establishing a ‘premier league’ of crypto stalwarts.” 

Currently, cryptoassets and currencies are treated as property under US law, unlike traditional fiat currencies. Kolstad added that some of the largest obstacles to regulation are taxation classification dilemmas over ‘hard forks’ and ‘airdrops’.   

A hard fork is splitting of blockchain construction protocol, which renders previous blocks obsolete and is used to overwrite substantial bugs or instances of hacking. Airdrops are a free distribution of tokens to wallets, usually to generate publicity and increase a userbase. 

Efforts to bring cryptoassets and currencies inside the law, which include the introduction of a bill earlier this month by US law makers that would pave the way for crypto token regulation, coupled with support form the likes of Starbucks and Tesla could serve to make them appetising even for more cautious investors.  

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