Bitcoin - the risks every law firm needs to know

Bitcoin - the risks every law firm needs to know

By David Smith

Just the other day I was reading about a law firm which claimed to be the first to accept Bitcoin for its services in the UK. This got me thinking about the acceptance of Bitcoin and other alternative currencies, and what it might mean for law firms.

Of course, the announcement was in part a publicity issue. In fact, another firm promptly asserted that they had been accepting Bitcoin already and so were the "true" first. Although, Bitcoin is not actually being accepted for payment. Bills are still being issued in Sterling and there is a third-party payment gateway that accepts payment in Bitcoin at the current rate of exchange to satisfy the bill.  The law firms are not so much advertising that they accept Bitcoin payments, but rather that they have partnered with a payment organisation that will accept Bitcoin. From a law firm’s point of view, accepting Bitcoin is no different from accepting Euros or Dollars. Their bill is rendered in Sterling and this will appear in their bank accounts from the payment processing company. Tax will be calculated and paid on the basis of the original Sterling bill.

That does not mean that accepting Bitcoin is an issue to be taken lightly, however. Significant money laundering obligations come with it. All solicitors (when working on matters that fall within the regulated area) must comply with the requirement to ensure that funds are not laundered or procured illegally. This inevitably involves an inquiry into the source of funds. With Bitcoin this is practically impossible. Bitcoins are traded, but they are also generated by computers "mining" them. From an external viewpoint, this mea

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About the author:

David is a specialist in residential landlord and tenant law. He advises landlords and agents in this field with a particular focus on changes in the law. He is well known for his work on tenancy deposit protection, houses in multiple occupation and consumer protection legislation. David acts for clients needing specialist drafting of tenancy agreement, terms of business and other documents, in relation to complex landlord and tenant litigation, and also in defending clients faced with prosecution for alleged breaches of landlord and tenant and related consumer protection legislation at which he has an enviable record of success. David believes in offering sensible advice that fits with his clients business and personal needs. As a specialist in law firm compliance fulfilling this role within the firm he is practised in steering a reasonable path between legal obligations and practical considerations.

David also provides specialist training and lecturing on his areas of expertise at all levels having spoken and provided training courses for solicitors, surveyors, letting agents, and large and small landlords.

David is also a skilled and experienced mediator offering advice on the law and practice of mediation and mediating property, landlord and tenant, and boundary disputes.