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In this episode of CHATTINNCYBER, our host Marc Schein interviews Stephen Palley, partner at Anderson Kill. He chairs the Technology, Media and Distributed Systems group of the organization. Stephen is also a regular speaker and prolific writer on insurance, construction, and technology. He is the lead editor and contributing author to the ABA Forum on the Construction Industry’s best-selling treatise on construction insurance.
When in law school, Stephen had planned on becoming a technology lawyer. In a few years, Stephen had learned programming, found a new method for settling cases, and turned it into a software program! He then came across Bitcoin and Ethereum – two branches of crypto assets, and started working for crypto clients both on the front end regulatory compliance and handling disputes. Hence, interestingly, Stephen had set his career as a successful crypto lawyer at a firm best known for representing policy holders.
Stephen speaks on regulatory crackdowns within crypto in the U.S. and China. The crackdown in China has impacted Bitcoin miners, and a lot of that impact has moved to the U.S. But Stephen firmly believes that a similar crackdown cannot happen in the U.S. Stephen also comments on recent guidance from the OFAC around Bitcoin and the facilitation of ransomware payments. He says the guidance puts victims in between a rock and a hard place.
Stephen also gives guidance for millennials and Gen Z’ers who are fascinated by cryptocurrency. He says no matter what new thing is brought up, you need to remember that regulators and law enforcement judges will have access to it. Also, this is never quick money without effort – risks exist.
“We already have a fairly well-developed regulatory framework and a way of understanding crypto. I think it is too deeply embedded in our business at this point for it to disappear.”
“What we do tell people is that when faced with a conundrum, we definitely want you to be in touch with law enforcement.”
“If you are expressing a favorable opinion publicly about a security and you have a stake or position, and if you are being paid to promote it, under federal law, you have to disclose that.”
“Just because you gave something a new name doesn’t mean that regulators and law enforcement judges won’t be able to deal with it and address it.”
“One of the reasons for the fascination with space is pure and simple: the promise of hope for quick profits with not much work. I’m sorry, but it comes from somewhere, there’s always a risk, and somebody always pays.”
“What people don’t know is what’s happening behind the scenes. Most regulatory enforcement actions are confidential. You have no idea what the competitor is dealing with.”
[01:03] – Stephen reveals his story of getting into insurance law and crypto.
[04:21] – Stephen comments on the regulatory crackdown in crypto in the U.S. and China.
[08:30] – Guidance from OFAC on Bitcoins and facilitation of ransomware payment.
[12:47] – Advice for the millennials and Gen Z who have a fascination with cryptocurrency.
[14:33] – Risk management and insurance policies.
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