THREE QUESTIONS TO JAMES BURNIE, PARTNER, GUNNERCOOKE
They are our clients, our friends, good contacts or just people we met. They have a new vision, they are running great projects, they are developing new services or they just want to share their story. We interview key people of the blockchain and fintech ecosystem: if you want to be next, please email us at firstname.lastname@example.org.
Can you present yourself?
I am a partner at law firm Gunnercooke advising blockchain, crypto, DeFi, and FinTech enterprises. I am lucky to have been involved in blockchain from the early days, having advised on the first successful UK-based ICO and on the first equity issuance settled on-chain. Since then, I have developed one of the broadest crypto practices in the UK, with clients including digital asset firms, token developers, cryptoasset custodians, blockchain platforms, crypto-exchanges, exchanges run using distributed ledger technology, crypto-custodians, crypto-brokers, and crypto-funds. Highlights include having advised a sandbox business on becoming one of the first entities in the UK to become FCA authorised as a blockchain-based business; four firms through the FCA sandbox; on setting up a tokenised gold exchange; a regulator on setting up a sandbox; several custodians setting up safeguarding solutions for cryptoassets; and a range of hedge funds from small first time managers to some of the largest in Europe.
What are the legal specificities related to crypto in the UK?
Whilst the specifics depend on the project, the starting point is generally (i) whether a project requires FCA authorization and (ii) whether it requires AML registration. Generally, you can give clear answers to both of these questions, however, there can be difficulty if a project inadvertently falls with the definition of being a fund or e-money. In both of these cases, it may be that the specifics of the project have to be tweaked so as to fall within the correct regulatory framework. Currently, the biggest block to new firms at the moment is the time required to obtain AML registration, and this has been in part caused by a very large number of applications, some of which have not been of an acceptably high standard. Over the medium term, we would however expect this issue to resolve.
If you are not undertaking an activity which requires a licence, then it is still important to consider the general consumer law requirements. In fact, as a general rule, this is true in any jurisdiction as it is generally accepted that consumer protection law overrides contract in most countries.
Over the next few years, we are expecting some changes to the UK regulatory landscape. In particular, there is a high chance that some kind of approval will be required before you can make financial promotions of unregulated tokens into the UK, and we are seeing some movement towards the regulation of stablecoins used for payment service.
What is the most exciting project you are working on?
We are working on a wide range of projects, so it is difficult to pick just one. We are seeing a range of new shadow banking projects as a result of DeFi, new ways of providing payment services, and a new wave of fund managers entering into crypto. We are also in discussions with some large well established businesses regarding launching new projects, and it will be interesting to see what they will achieve. A particular interest for me is the speed at which the community is maturing, and as new ideas are considered there is going to be a wave of new innovations.
Post-brexit, we are also seeing a geographical shift in terms of how projects are being set-up, and we are seeing more businesses from Africa, Switzerland and Asia entering into the UK. As such, we are seeing a transition, and this could be very interesting, as we are seeing completely new perspectives on how crypto and blockchain technology can be most effectively used. Of course, our clients still see the EU as an important market, and to this end we have recently opened a German office specializing in blockchain and crypto, to assist clients looking to expand into Europe.