Law Firms Jockey in ICO Boom

March 6, 2018
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As Switzerland emerges as a global hub for initial coin offerings, the alpine nation’s law firms are not far behind. Many are open to taking on «innovative» payments for fees, finews.com has learned.

Switzerland as a «crypto nation»? Minted by Switzerland’s economy minister Johann Schneider-Ammann, the nickname reflects the country’s standing alongside Hong Kong and Singapore as a global hub for raising funds via initial coin offerings, or ICOs (click here to read more about Switzerland and ICOs). 

Last year, start-ups launched roughly 70 ICOs to raise a total of 1 billion Swiss francs. This year, that number is expected to surge to 1.5 billion francs with 120 coin offerings. The unusual form of fundraising has rapidly advanced to an institutionalized form of financing – partly thanks to the interest of big law firms as well.

Bitcoin for Legal Fees

A host of well-known securities law firms in Zurich don’t just accept cryptocurrency business – they are accepting bitcoin and other digital currencies in a bid to actively court token providers, finews.com has learned.

Baer & Karrer, for example, told finews.com it accepts «tokens as part of our total fees,» provided it approves of the start-up’s business model. Froriep, another major law firm, accepts bitcoin in certain circumstances, managing partner Nicola Benz said. 

«However, it is not our policy to be paid in tokens from our clients’ ICOs as this is not compliant with our need for independence when giving advice,» she told finews.com. The two were among the first to jump on the Swiss ICO train. Wenger Vieli, another large Zurich law firm, published a paper titled«ICOs – The New Gold Rush?» (in German) last November.

ICO Advice is Standard

Advising on ICOs is almost a standard offering for law firms: MME in Zug, Baer & Karrer and Froriep as well as Wenger Vieli, Walder Wyss and Kellerhals Carrard have all advised crypto projects on raising money. Homburger has also weighed in with a commentary on Finma’s recent ICO guidelines.

To be sure, compared to the daily business of law firms – mergers and acquisitions and securities issuance – ICOs aren’t yet the new gold rush. But firms are already thinking of how to parlay the current glut of ICOs into a more sustainable business.

«We also advise established firms exploring blockchain technology and thinking of utilizing in capital markets. The ICO expertise is valuable for this,» Walder Wyss partner Thomas Mueller told finews.com. Baer & Karrer echoed his sentiment.

Conflicts of Interest

Most start-ups planning an ICO in Switzerland are consulting law firms, especially after Swiss regulator Finma cracked down on fake schemes last year. The appearance of a Bahnhofstrasse law firm credibility to young firms with little experience with investors – but they are expensive.

The law firms accepting cryptocurrencies as payment view it as a form of goodwill, but practices vary widely from firm to firm. Mueller says Walder Wyss doesn’t accept tokens due to the potential conflict of interest. Froriep, which accepts only bitcoin as cryptocurrency, doesn’t accept coins from a client’s own ICO for the same reason.

Kellerhals Carrard is somewhere in between, according to managing partner Beat Brechbuehl, who told finews.com the firm had accompanied various ICOs and discussed payment in cryptocurrency. 

«Until now, we haven’t accepted any [cryptocurrency],» he said. Why? The volatility of tokens, said Brechbuehl, who also noted that Kellerhals Carrard is looking at hedging solutions. «If we’re convinced of it, then we’re open to accepting cryptocurrencies.» 



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