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Big Law Betting on the Rise of Cryptocurrency Due to Increasingly Complex Regulatory Scheme

By Dylan Jackson for Law.Com

Cryptocurrency is having its moment in the spotlight, and Big Law firms are betting on the industry to grow and legitimize.

Cahill Gordon & Reindel, Brownstein Hyatt Farber Schreck and Quinn Emanuel Urquhart & Sullivan pulled from government ranks to bolster their cryptocurrency offerings this week as the industry faces increased interest from institutional investors as well as government regulators.

The newly arriving former government lawyers say the increased visibility of the industry makes it an emerging growth area for law firm securities practices.

“I don’t think anybody thinks that crypto is going away. That’s why some of those more established white shoe financial firms are interested in getting into this space. It’s a huge opportunity,” said Sarah Heaton Concannon, a former SEC senior attorney that joined Quinn Emanuel on Monday as co-chair of its SEC enforcement practice.

To be sure, some firms such as Quinn Emanuel, FisherBroyles, financial services boutique Murphy & McGonigle and Manatt, Phelps & Phillips have been operating in this space for awhile now.

Quinn Emanuel has a dedicated digital asset litigation practice group that has litigated several high-profile crypto cases in the past years. The firm has also accepted bitcoin as payment since 2019. 

But the increasing attention of more firms is driven by two factors: more attention from larger institutions and an increasingly complex regulatory scheme that necessitates legal advice.

Federal regulators such as SEC chair Gary Gensler and the Commodity Futures Trading Commission (CFTC), as well as state law enforcement officials such as New York Attorney General Letitia James, have signaled a more hardline stance on cryptocurrency in the past year.

Just this month, Deputy Attorney General Lisa Monaco announced the formation of a new enforcement team that will investigate and prosecute criminal cases involving cryptocurrency in an effort to “strengthen our capacity to dismantle the financial entities that enable criminal actors to flourish—and quite frankly to profit—from abusing cryptocurrency platforms.”

Among the chief concerns is the use of cryptocurrency in money-laundering schemes and as payment for illegal activities such as ransomware attacks.

And with increased regulatory attention comes greater legal needs, said Emily Garnett, who returned to Brownstein this week after a stint at the SEC.

Garnett added that, before, only crypto issuers and specialized tech firms used cryptocurrency. But now, “You’re seeing the legitimizing of the industry. You’re now seeing major financial institutions looking to provide crypto ETFs, legitimate companies wanting to explore stablecoin.”

Two firms—ProShares and Valkyrie Funds—recently came out with bitcoin futures ETFs; major companies such as Microsoft, Whole Foods and Starbucks accept bitcoin as payment; and numerous other companies, completely unrelated to cryptocurrency, are exploring blockchain technology for their own firms.

“There’s a wide range of exciting, great clients out there that traditional law firms may not be representing. A body of folks that need counsel,” said Samson Enzer, a former SDNY prosecutor who joined Cahill as counsel Monday.