Beware of taking fees in crypto, SRA warns
By Michael Cross >>
(2 February 2023)
Firms taking payments in cryptocurrency could find themselves in breach of Solicitors Regulation Authority accounts rules, the regulator warns today. The reminder appears in a ‘risk outlook report’ on cryptocurrencies and other distributed ledger technologies and the impact they may have on the legal services sector.
The report notes that some firms are using blockchain technologies to improve delivery, while HM Land Registry is among the organisations adopting them as standard practice. So-called smart contracts ‘have the potential to greatly speed up many legal transactions,’ it suggests.
On fee payments, the report reminds practitioners that money held on account must be held in a bank or building society account. ‘As there are no compliant client accounts for crypto assets offered by banks or building societies at present, payment for services in crypto assets will only be possible after the services have been provided or as a fixed fee’.
The regulator also warns that the ‘highly volatile’ nature of crypto assets could create difficulties with price transparency requirements.
Overall the report is upbeat about the potential of crypto technologies, citing the view of the master of the rolls that the sector is in the same stage of development as the internet was in 1995.
Paul Philip, SRA chief executive, said: ‘Some firms are at the front of the queue when it comes to adopting new ways of working while others need to be aware of what’s happening so they can properly support their clients and manage the impact on their business. These are complex and topical areas, particularly around cryptocurrencies, so our timely Risk Outlook will help firms to get to grips with the key issues and provides further resources to help those who want to know more.’
(Courtesy: The Law Society Gazette)