The FTX crash is a singular case and doesn’t indicate that crypto technology itself is unviable, said Jeff Strnad, a Stanford law professor who teaches courses on blockchains and cryptocurrencies. FTX was a centralized exchange, he notes, contrasting it with Uniswap, a decentralized exchange that operates with no third party mediating transactions.
While the FTX debacle appears to have little to do with the underlying crypto technology, the scandal has affected funding to the sector, he said. Crypto projects have been pulled or have had funding cut, meaning startups have less money to afford lawyers, he said. Technological developments will also be delayed, but not stopped. Eventually, he predicted, the funding will come back.
Government regulation, a major driver of law firms’ work, remains undeveloped, Strnad said. That means crypto projects face a gray area rife with potential problems.
Under the circumstances, the attorney’s role is to outline multiple scenarios stemming from that ambiguity. The extra possibilities that attorneys need to explore, Strnad said, mean extra work, and therefore more business.
Even if regulatory oversight becomes clearer, however, clients may still be confused about what the restrictions are or how to comply.
“If I’m advising a CEO or something like that—they’ve got to do this,” Strnad said of crypto firms hiring legal aid. “You don’t want to go out there and just close your eyes.”Read More