Whether cryptocurrency creators want to admit it or not, Mark Zuckerberg’s famous motto of “move fast and break things” has become a defining ethos in the industry. Some projects have come under scrutiny from the US Securities and Exchange Commission (SEC) for allegedly offering unregistered securities, with question marks lingering on many others.

At the recent 0xpo Crossroads conference in San Francisco, Lisa Rubin, a blockchain and fintech attorney with the law firm Paul Hastings LLP, explained that that mindset toward building Web3 can come back to haunt any project that doesn’t seek legal guidance before launch. jump. the wild.

“A lot of early-stage projects are so excited to build that they then worry about the legal side, which is very understandable,” Rubin said. decipher in the event. “But the thing is, it’s actually better at the construction stage to talk to some legal help.”

US regulators, including the Treasury Department and the SEC, have stepped up their investigations into crypto projects, as well as exchange and lending platforms that list their tokens. What decipher wrote in August, the SEC and Chairman Gary Gensler have “turned from rhetoric to enforcement,” with their eyes set on current and past projects that the agency believes violated securities law.

By launching or commercializing a project before getting input from expert crypto lawyers who closely follow the evolving regulatory landscape, Web3 developers only amplify the potential risk they face in the future.

“You can’t take that back,” Rubin said of the crypto marketing claims. In his opinion, it is better to make the necessary adjustments during the construction stage, rather than after launch, when such legal issues could threaten the goals or functionality of the project.

In July, the SEC said it was opening an investigation into Coinbase, the largest cryptocurrency exchange operating in the United States, alleging that the company listed nine tokens that the agency considers unregistered securities. Coinbase has denied the agency’s claims.

In November, the SEC won its case against LBRY when a court found the firm committed securities violations by launching and selling its native LBRY Credits (LBC) token.

Many in the space see the advancement of federal regulators and the lack of clear regulation as signs that more and more US-based crypto projects will move to more crypto-friendly countries. However, Rubin said this will not necessarily protect Web3 developers from the long arm of US law enforcement.

“This is a misconception,” he explained, “because even if a company is formed abroad, it may still be subject to US law if it is dealing with US customers or doing business in the US. .”

In September, the SEC shocked the crypto space when the agency claimed it had the right to sue Ian Balina, a crypto influencer, for failing to register a cryptocurrency as a security in 2018.

The Balina case is controversial in part because the agency alluded to the US government having jurisdiction over all transactions on the Ethereum network. Rubin said now is the time for builders to pay close attention to what is happening with Congress and the SEC.

There could be tough times for cryptocurrency creators, depending on the next moves by regulators, but it will surely bring plenty of opportunities for lawyers who specialize in the sector.

“It’s very exciting,” Rubin said of crypto law. “The law is a bit of a gray area, and it moves fast.”