Crypto Talent War Refocuses on Lawyers

Just as the legal and regulatory landscape is being created in the U.S., EU and around the world, law firms and corporations are having a lot of trouble finding lawyers with experience in cryptocurrencies and blockchain to help them navigate the growing number of rocks and shoals.

That shouldn’t be surprising. Banks and financial institutions are having the same trouble hiring crypto-knowledgeable staffers — on both the banking and development side — as they work to integrate blockchain technology and explore adding decentralized finance tools to their toolboxes. And cryptocurrency firms can’t hire enough developers to finish projects on time. Top crypto exchange Coinbase alone has said it plans to hire 2,000 employees in 2022.

Still, the shortage of lawyers may be the most troublesome development as the U.S. finally embarks on a serious, coordinated effort to build a well-developed, comprehensive legal framework for cryptocurrency in the wake of President Biden’s March 10 executive order on the subject.

See also: Biden’s Executive Order Set to Fast-Track Crypto Policy

And in Europe, the EU’s Markets in Crypto Assets (MiCA) legislation is moving ahead full-speed after passing Parliamentary vote in March.

Also see: EU Crypto Industry Coordinates Efforts to Amend EU Rules

Poaching Talent

In February, the chief legal officer of another top U.S. crypto exchange, Kraken, announced on Twitter that he planned to hire 30 lawyers in three months.

“I’d like to hire 60, but honestly I don’t know how to get it done,” Marco Santori said. “Can I acquire a law firm?”

In February, ICS, a recruitment firm focused on the IT, accounting and finance, and compliance and legal fields, said in a blog post that over the past few years, it “has witnessed a crypto hiring frenzy — with a rise in companies seeking to build out crypto teams. This surge has been fueled by the emergence of blockchain technology and cryptocurrencies as a viable business venture.”

And with so little crypto law settled, investors are focused on ensuring the projects they back get it right.

“The consensus is you need to have someone in-house early,” John Wolf Konstant, a senior consultant tech-focused legal recruiting firm Whistler Partners, told The Wall Street Journal. “Especially since investors are going to require that, you need to have someone there to help chaperone the process and to make sure everything is buttoned up from the start.”

Not only are those firms having trouble finding new lawyers, they are having trouble hanging onto their own.

“Kraken legal is fully on track with its hiring goals since my comments in February,” Santori told the Journal. “We are attracting the best lawyers from both traditional finance and white-shoe firms. The brain drain is real, and we couldn’t be happier with it.”

Now More than Ever

Aside from the need to understand what is happening in that endeavor and figure out how it will affect both their own firms and those of clients, crypto companies are facing a growing onslaught of regulatory action, with the Securities and Exchange Commission (SEC) in particular having made it abundantly clear that it doesn’t intend to slow down its own enforcement actions while the law is being written.

See more: SEC’s New Top Cop: No Free Pass For Unregistered Crypto Lenders

That particular need grew substantially in February, when crypto exchange BlockFi agreed to pay a record $100 million in penalties — half of it to the agency and half to 32 state regulators — over its crypto lending program.

Read more: BlockFi’s $100 Million Settlement With SEC Raises Internal Discussion

Crypto lending/borrowing programs have been at the core of decentralized finance (DeFi) during its explosive growth over the past two years, with crypto owners locking holdings into protocols that allow others to take out smart contract-controlled loans by putting up collateral of as much as 150% of the amount borrowed. That has proven so lucrative that centralized lenders like BlockFi jumped in. Coinbase barely stayed out after the SEC warned it off.

Read also: SEC’s Campaign Against Crypto Lending Grows Beyond Coinbase