As part of the Digital Currency Council’s Continuing Education partnership with Inside Bitcoins, the DCC’s Director of Curriculum, Dan McArdle, has had the opportunity to interview the thought leaders that will be speaking at Inside Bitcoins Berlin on March 5-6. Today, we share insights from Lutz Auffenberg of Winheller Attorneys at Law and Tax Advisors. Lutz is a banking and finance lawyer and deals with questions regarding regulations and required licenses for financial service providers.
Dan: Tell us a little about your background in Bitcoin and Digital Currencies, and how and why you got involved?
Lutz: My attention came to Virtual Currencies in early 2013. The value of the Bitcoin was on a steady rise and clients addressed me as Bitcoins are considered as financial instruments in Germany and most Bitcoin-related businesses require a licence from the financial authority BaFin before going live. I quickly realized that the Bitcoin community is a young and dynamic industry with a lot of potential to revolutionize the traditional financial market. In 2014 I have founded the Global Network of Crypto Currency Law Firms (GNCCLF). Our members are leading law firms in the field of crypto currency law. We are now able to provide our clients with the knowledge of VC-experts on an international level, which is a huge advantage due to the fact that most clients do not want to limit their business to only one national market.
Dan: Are there any key misconceptions or errors that you repeatedly see Bitcoin businesses make?
Lutz: The most important step that has to be taken before putting a business idea into practise is a sound and self-critical assessment of the economic and legal feasibility. From my perspective I can tell that many founders do not care about regulatory obstacles and take the risk to start their business without legal advice. Conducting financial businesses without a necessary licence is a criminal offense in Germany. In addition to this, the competent authorities are empowered to close down the business from one day to the other if a required licence is missing. Over the last years I have seen many good ideas fail because of this mistake.
Dan: How do you see the global regulatory landscape developing? Do you think governments are likely to coordinate regulatory efforts? Will we see some of the international financial regulatory bodies address Bitcoin and Digital Currencies specifically?
Lutz: From my point of view they will not have a different choice. Digital Currency is a completely new phenomenon that can hardly be put into the existing legal frameworks of the international jurisdictions. Many important questions remain unanswered. At this point it will be the task of the legislators to implement new provisions applicable to Digital Currencies. The regulatory bodies will then have to take the second step and execute the new laws.
Dan: How can digital currency companies successfully navigate the international regulatory landscape today?
Lutz: Again, the legal situation of every market that shall be addressed must be assessed carefully before starting the business. Competent advisors have to be contacted right from the start.
Dan: How can the digital currency community best educate both the public and regulators as to the benefits of Bitcoin and digital currencies?
Lutz: It is very important that the public as well as the regulators understand the functionality of Digital Currencies. Events like Inside Bitcoins are a very good opportunity for the required discussion about this topic. I would much appreciate if the regulator side would more often attend summits dealing with the topic. This would also help to avoid the widespread impression that the regulation of Digital Currencies is only an obstacle for founders. It can help to bring trust to the market, especially when it comes to the prevention of market and fraud risks.
Dan: What are you planning to speak about at Inside Bitcoins?
Lutz: We will have a panel discussion about emerging issues in regulatory law. Together with my colleagues Brian Klein (USA) and Adam Vaziri (UK) we will spot the current status and the latest developments in Digital Currency law. The discussion will give a good insight into the legal trends in Europe and the United States.
Dan: Lutz, thank you very much for your time, insight and support of the Digital Currency Council.