Clearly, 2022 was a troubling year for cryptocurrencies, digital assets like NFTs, and their investors. The crypto markets declined in value, and significant crypto ventures like FTX, Voyager, Celsius, Three Arrows Capital and BlockFi declared bankruptcy, leaving investors empty-handed. We can expect 2023 to bring much-needed governmental regulation.
Historically, the Great Depression was followed by the Securities Act of 1933 and the Securities Exchange Act of 1934, which introduced regulations and protections (including, for example, FDIC insurance). We expect the crypto “winter” of 2022 to be followed by comparable legislation.
We hope and expect the regulations to add consumer protections and bring some balance and fairness to the crypto industry.
Meanwhile, there are practical applications to blockchain technology across a diverse spectrum of industries, from real estate to art to consumer goods. Following the nadir of 2022, we expect digital assets to be better regulated, but digital assets won’t disappear, and over time, we expect more adoption of blockchain by mainstream businesses. And, like the Internet in its infancy in the 1990s, significant new wealth will be created.
During 2022, while the crypto markets reeled, we continued to assist our clients with the following:
- Creation of onshore and offshore business entities to buy, sell, and custody digital assets.
- Transactions related to digital currencies and tokens, including their sale, transfer, and escrow.
- Creation of asset protection trusts specific to digital assets.
- Working with jurisdictions (like Wyoming in the US and Switzerland and Liechtenstein offshore) that offer crypto regulation and oversight.
- Working with trustees, banks and other custodians who are equipped to safely own and custody digital assets.
While 2022 was dominated by stories of crypto fraud, hacks, bankruptcies and losses, we believe that this will give way to a more stable and balanced crypto industry. We can assist you in navigating the legal aspects of the new technology and the laws that will evolve around the technology.