Interview by David Berger, CEO of the Digital Currency Council, with Chris Werner of Werner Business Law – a boutique law firm in Chicago that is committed to helping businesses achieve their goals. Chris is also the primary source for “Bitcoin for Small Business: Pros and Cons”.
David: Chris, your practice is uniquely focused on small business clients. Could you tell us a bit about your background and what you do for your clients?
Chris: I began my career at a large national law firm where I was part of the commercial litigation group. I represented Fortune 500 companies in large, complex commercial litigation matters. During the early part of my career, I also began to develop an interest in all kinds of new technology. I realized that most attorneys were intimidated by new technology and therefore avoided it both in terms of advising clients and implementing it for their practices.
I have taken my early experience and now apply it in a boutique setting that allows me to provide sophisticated business legal advice in a way that is accessible to a wider audience. I also have the freedom to explore and implement all kinds of technology that provide an advantage to my clients.
David: Is Bitcoin a significant topic of discussion in Chicago? Are you seeing similar early adoption as in the rest of the country?
Chris: There is definitely a lot of buzz with Bitcoin and other cryptocurrencies. Many companies are interested, but they don’t exactly know where to start. A lot of the discussions I have been having with clients over the past year involve providing background information and helping identify possible opportunities to start using Bitcoin.
David: Over the past year, we saw almost 1000 new merchants begin accepting Bitcoin each week. What are their concerns? What motivates these business owners to accept the digital currency?
Chris: Regulatory and tax issues are definitely a big concern. Most merchants who have started accepting Bitcoin are very nervous about getting the tax issues correct. Since most of their accountants are unfamiliar with the tax rules relating to Bitcoin, it is often difficult for them to get the correct information and advice. The other big concern is volatility. There have been some big swings in the value of Bitcoin and most merchants are nervous about that.
With respect to motivation, it seems like most of the early adaptors do it as part of a marketing campaign. It seems to be businesses who are already involved with technology or who have a strong social media presence. These companies like to be on the cutting edge (even if they sometimes don’t know why).
David: Do these merchants typically seek legal counsel before deciding to accept bitcoin? Or do they come to someone like you after already accepting the digital currency? What prompts them to seek legal advice? Security? Recordkeeping? Regulation?
Chris: Some merchants do seek legal advice, but I have also talked with a lot of merchants who just start accepting Bitcoin and then later realize they might need some advice. I think tax issues are probably the number one concern of businesses accepting and using Bitcoin. The tax issues usually tie in with other things such as record-keeping and regulatory treatment.
David: Are there certain issues that you encourage all your clients to consider? Or is each client unique?
Chris: One of the first things I talk to every client about is their motivation for wanting to use Bitcoin. Once I understand their motivation, I am better able to advise them on whether or not they really should be using Bitcoin at this time.
Beyond that, there are definitely some topics that always come up, such as tax issues, record keeping, whether to hold Bitcoins or immediately convert them, and current regulatory issues.
After those initial topics, the advice tends to become much more individual depending on the business and how they intend to use Bitcoin.
David: Are their specific compliance issues related to bitcoin that raise the most concern for you? Are their processes or procedures that you implement for your clients that help to mitigate those risks?
Chris: At this time, I think the tax issues have the most potential to cause problems. There are certainly procedures that I can help implement with clients to mitigate this risk.
David: Are any of your clients yet paying their employees in Bitcoin? Are there specific legal concerns that this could raise?
Chris: I don’t currently have clients who pay employees in Bitcoin. I have discussed the potential for this with a couple of clients. Payroll taxes are probably the biggest concern with these types of payments.
David: What should small business owners be thinking about with respect to Bitcoin in 2015?
Chris: For small businesses that are not specifically involved with Bitcoin or cryptocurrencies, I would continue to advise caution. The laws are just starting to evolve, and that likely means regular changes and updates to procedures. However, I think 2015 will be a year in which accepting payments in Bitcoin will become easier and more streamlined. If a company is interested in Bitcoin, they should target 2015 as the year to start getting involved.
David: Chris, thank you very much for your time, insight and support of the Digital Currency Council.
Chris: My pleasure.