As you are well aware, the law often lags behind technological advances. This year, the “Interactive” portion of the SXSW festival hosted a variety of sessions, focused mainly on emerging technologies. One I found particularly resonant was a session about the legal issues surrounding Bitcoin, “Cash, Credit, Bitcoin? The Law of Digital Currency”, presented by David Beam, Partner, K&L Gates LLP. As Mitratech offers an e-Billing product, it helps for me, as General Counsel, to be aware of the Bitcoin developments that could impact Mitratech’s clients.
I see how Bitcoin presents opportunities for international transactions. However, use of Bitcoin raises fascinating tax questions, as the Internal Revenue Code appears too narrowly written to apply the logical tax treatment to Bitcoin transactions. Internationally, Bitcoin’s interaction with VAT needs to be considered. Also, as Bitcoin presently avoids PCI standards that would apply to credit card transactions, a General Counsel must decide whether Bitcoin’s security safeguards meet the standards required of one’s client institution.
I also have to wonder if companies will start paying their law firms in Bitcoin. Before scoffing at such a proposition, the now-standard practice of electronic billing was once a foreign concept. (In fact, at the SXSW tech show, a salesperson tried to sell a peer a framed picture; in the corner of the picture was a symbol that was loaded with Bitcoin, and just needed to be scanned.) Only time will tell whether Bitcoin will follow the way of the once-important VHS or the oft-forgotten Betamax.
For any company accepting, or considering accepting, Bitcoin as payment there are many new considerations, as Bitcoin operates outside of a traditional currency framework. As a General Counsel, I have to ask questions like:
- How will contracts need to be adjusted to ensure the company is legally protected?
- Will governments create a special tax treatment for Bitcoin?
- How will that affect companies conducting electronic transactions?
I have so many questions, and many may not yet have answers.
I hope SXSW will continue to schedule legal sessions, similar to the Bitcoin presentation. I see a lot of opportunity to SXSW to develop public awareness around how law intersects with technology. Who knows, maybe Mitratech, as a company focused on the improvement of legal departments through technology, will be involved in presenting a SXSW session in the near future? Regardless, I hope more corporate attorneys, particularly those in cutting-edge markets, will attend SXSW next year. Plus, while you are at SXSW, you might as well catch a comedy or music show!
Disclaimer: the contents of this blog do not constitute legal advice, and should not to be treated as such. The communication of information in this blog do not form an attorney-client relationship between you and the author nor are intended as a solicitation.