Blockchain & cryptocurrencies legal and regulatory round-up: June

iLaw, a cryptocurrency law firm in London

iLaw, a cryptocurrency law firm in London specializing in technology, has launched a new series of articles, in which our Blockchain, Cryptocurrency and Digital Assets team will be highlighting some of the latest legal and regulatory developments in the UK and globally. In this round-up, Mariya Lazarova and Allan Murray cover:

  1. The announcement of the EU’s regulatory regime for cryptocurrencies;
  2. The spike in consumer uptake of cryptocurrencies in the UK;
  3. The FCA’S Money Laundering Regulations for crypto businesses carrying out certain activities in the UK;
  4. The response of several US Bar associations to the use of digital currencies as a form of payment for legal services;
  5. The new Swiss laws removing legal barriers on blockchain and DLT; and
  6. Bitcoin theft in Russian criminal courts.

EU’s Regulatory Regime for Digital Finance and Cryptocurrencies

On 23 June 2020 during his speech at the Digital Finance Outreach 2020, Valdis Dombrovskis, the EU’s Executive Vice President of the European Commission for An Economy that Works for People, announced that there new measures on the regulation of cryptocurrencies are imminent. Although Mr Dombrovskis’s speech did not give much detail, of particular interest was the mention of regulating stablecoins. In October 2019, Mr Dombrovskis also alluded to the regulation of stablecoins, following Facebook’s plans to introduce Libra. The digital finance strategy and supporting legislation is expected to be revealed later this year. Currently, unregulated cryptoassets will be covered according to the proportionality of their risk to turn Europe into the leader for digital finance.

FCA’s Cryptoasset consumer research 2020

3.86% of the UK general population, or 1.9 million people, are estimated to own cryptocurrencies according to the FCA’s latest report. Most of the holders possess the relevant technical knowledge of the assets as well as an understanding of the associated risks. These findings are significant as they represent a spike of 2.35% of the population over one year. The role of exchanges, particularly non-UK ones, is notable as more than half of crypto owners use their services. With such an increase in popularity, the importance of introducing appropriate regulatory safeguards for cryptoasset trading is equally on the rise.

Deadline for MLR registration with the FCA

Businesses carrying out certain cryptoasset activities in the UK were required to submit their registration applications to the FCA by 30 June 2020. In January this year the FCA became the AML/CTF supervisor for such businesses. Although the technical registration deadline is 10 January 2021, the FCA set the June 2020 deadline to give itself ample time for processing the applications and liaising with applicants on any follow-up requests. The risk for those businesses who failed to submit an application by 30 June 2020 is that their subsequent application may not be processed by 10 January 2021, in which case they will have to cease trading.

Legal costs and digital currencies

Four bar associations in the US have now issued statements on payment in cryptocurrencies for the legal services of their members. The DCB (the District of Columbia Bar Association) was the most recent one, stating that it is “not unethical for a lawyer to accept cryptocurrency”.  Prior to the DCB, official statements were made by the bar associations in Nebraska, New York and North Carolina. There is a slow but steady payment revolution on the rise in the legal sector and, recently, iLaw became one of the first law firms in the UK accepting payment in the form of BTC, ETH or other cryptocurrencies.

Swiss laws and blockchain startups

We have previously noted Switzerland’s attractiveness for banking purposes in the crypto and blockchain sphere.  New legislation has been introduced by the Swiss Federal Council which aims to cut the red-tape on security token transfers, facilitate claims of ownership over a bankrupt’s crypto estate and details how trading platforms and DLT providers can secure a license. The legislative move went through without opposition.

Bitcoin theft is not a crime?

Bitcoin might be a form of property in English law, but in Russia, a criminal court denied restitution to a victim who had to pay ransom to his kidnappers in the amount of 5 million rubles in cash and 99.7 BTC ($900,000 at the time in 2018). The court ruled partially in the victim’s favour on the claim for the rubles. However, the claim for the return of the BTC was not successful as, with no legally recognized status, it was not deemed a crime against property.

If you require legal assistance, contentious and/or transactional, in the field of blockchain, cryptocurrencies and digital assets, please contact our Senior Associate, Allan Murray via email at  allan.murray@ilaw.co.uk or our Trainee Solicitor, Mariya Lazarova at mariya.lazarova@ilaw.co.uk.

Coronavirus: How employers can prepare

Coronavirus: How employers can prepare

By Julian Cox, Head of Employment at iLaw

As the transmission of this latest virulent strain of Coronavirus grows daily, employers are beginning to grow concerned about its impact on their businesses and organisations.

The likes of Google and Amazon have already restricted work travel to the worst affected regions of China, such as Hubei, while some airlines, such as Hong Kong’s Cathay Pacific have cut the working hours of staff to reflect the shrinking demand for travel to China.

As the number of deaths worldwide surpasses the previous SARs pandemic more than a decade ago and the number of infected people in the UK grows employers may need to consider what steps they can reasonably take to ensure that staff have a safe and healthy environment to work in.

Identifying the Coronavirus

This time of year, is always a hotbed for illnesses be it the common cold or a more serious flu, so how can employers identify someone who is potentially affected by Coronavirus?

The Novel Coronavirus (2019-nCoV or “Coronavirus”) has flu-like symptoms such as a fever and a cough, which can develop into severe pneumonia causing breathing difficulties that can, in the most serious cases, result in organ failure and death.

The most at-risk group are those with pre-existing illnesses, weakened immune systems, the elderly and those with long-term conditions, such as diabetes and cancer.

Many of the symptoms are similar to those of a typical cold and a person can be infectious before these symptoms become obvious.

At the moment, the Government is very much focused on those who have visited mainland China, in particular Wuhan and the Hubei region, or those who have been in contact with people from this area.

Business Travel 

The Coronavirus has spread around the world at a rapid rate, but the majority of cases and most deaths have occurred in Wuhan, which is why the city is currently under strict quarantine conditions.

Currently, the UK Government has advised against all but essential travel to mainland China and all travel to Hubei Province.

If a person travels against that advice they not only risk invalidating travel insurance policies, but they may also find themselves facing stricter checks on their return and a possible self-imposed quarantine or an officially enforced quarantine.

For the safety of your employees, it may be sensible to consider whether existing plans to travel overseas to at-risk areas can be postponed or cancelled or, if they are essential, whether they can be conducted via video conferencing.

Employees returning from at-risk areas are advised to remain indoors and avoid contact with others for 14 days after leaving the area.

Should they show any symptoms of the Coronavirus, it is important that they contact a GP and make it clear that they are returning from China or have been in contact with a person from an at-risk region.

Employers must remain in frequent communication with affected staff members to ensure they take all necessary precautions to keep themselves safe.

If you are concerned that they could pose a risk to your workforce it may be sensible to suggest that they work from home for a minimum of 14 days, to ensure that they are not infectious.

Protecting your workplace

The workplace is often a breeding ground for viruses and it is not uncommon for a large proportion of a workforce to come down with a similar illness all at the same time.

Employers have a legal obligation to ensure the health and safety of their employees and so you should ensure that excellent hygiene standards are enforced across the business.

This includes, but is not restricted to:

  • Regular hand washing
  • The distribution and use of alcohol sanitising products
  • Use of signage to encourage staff to remain hygienic
  • Regular cleaning of the work environment
  • Free private health screening.

Those most at risk are frontline carers, such as doctors, nurses, teachers and care workers, but all employers must take the risk seriously, regardless of the sector they operate within, and properly protect its workforce.

It is also advised that you as an employer:

  • Keep up to date with and follow public health agency advice
  • Adapt business plans to reflect changes to your workforce should the UK become adversely affected
  • Communicate any change of plans to your workforce
  • Consider remote working options
  • Consider using customer self-serve options, such as online services, to reduce face-to-face interactions.

Coronavirus affected business

Having looked at some of the preventative measures that a business can put in place, what happens if someone in your organisation contracts Coronavirus?

The first and most important step is to follow your current sickness absence policy. This should cover the standards of attendance and obligations of staff members that must be met.

As a precaution, it may be worth reviewing this policy now and sharing it with the appropriate people within your business or organisation.

You should communicate to employees the need for them to report any symptoms they have that are consistent with Coronavirus to their doctor and make a note of any colleagues they may have been in close contact with before the symptoms emerged.

Where a person is displaying symptoms and a doctor has requested Coronavirus testing or signed them off as not fit to work, it may be a sensible step to briefly suspend them with pay on precautionary grounds.

This step should only be taken in line with your policies and must be applied consistently for all members of staff to avoid any claims on the grounds of discrimination or constructive unfair dismissal.

Protecting the health of your entire workforce and the interests of your company must not be underestimated and in most cases, employees will likely understand the steps that you need to take.

While there is certainly a growing fear over Coronavirus it should be treated the same as any other infectious illness, such as the flu.

Future considerations

If the virus itself isn’t concerning enough, there are now growing fears that actions by the Chinese Government to prevent the spread of the virus by quarantining entire regions could lead to a significant decline in world economic fortunes.

In particular, the supply of components to other businesses around the world may lead to the failure of companies and a decline in financial markets.

Many remember the difficult times the world faced in 2008 following the recession and a similar slowdown following the SARs crisis in 2002 – 2003.

During these uncertain times, employers must consider their employment costs ahead of this forecasted slowdown and refresh their knowledge of redundancy practices in case the worse should happen.

Next steps 

Considering the potential impact that this virus may have on the UK it is strongly advised that employers continue to carefully monitor the situation and seek professional assistance to review their current employment policies and procedures.

To find out how the employment team at iLaw can help, please contact us.

Designers may need to do more to protect their IP following worrying trends in retail, warns iLaw

Designers may need to do more to protect their IP following worrying trends in retail, warns iLaw

The decision by Aldi to remove a baby changing bag from future sale after it was accused of copying the design of another company is part of a worrying trend in retail according to innovative London law firm, iLaw.

The firm says that several big-name retailers have been accused of releasing items with similar designs to established brands and that it was important that smaller businesses took the necessary steps to enforce any misuse of their intellectual property (IP), as well as protecting their designs in the first instance.

In the latest example, it is understood that BabaBing, a Keighley-based child and baby products firm, have accused Aldi of copying its design when selling a similar bag to its own in Aldi stores in January at a significantly lower price.

BabaBing said it contacted the supermarket to make it aware that its product was “identical or at least very similar” to the one Aldi was selling and that some elements were the “same size and shape” as its own bag.

In response, Aldi said that its own research suggested that “similar bags have been on the market for some time”, but said that it would no longer sell the bag in future instore promotions.

This isn’t the first time that Aldi has been accused of copying other brands and it has previously been criticised for releasing furniture meant to replicate designer chairs made by Eames – designs which have also been reproduced by the likes of Tesco.

However, in this case, the firm was free to do so under previous UK copyright law, which only covered industrial designs for a period of 25 years after they are first marketed.

This period has since been extended to 70 years, but still only covers products where there is “a work of artistic craftsmanship”, a factor for which no statutory definition exists, which means it is often down to the court’s discretion.

Mark Culbert, a Director and IP specialist at iLaw, said: “Large retailers are taking a clever and considered approach when creating new products that walk a fine line when it comes to IP so that they can benefit from existing, recognisable brands and effective designs.

“Smaller designers and businesses who are concerned that their own designs or copyright may have been infringed can sometimes feel intimidated by these larger brands, but where a company has unfairly used or replicated their IP, they should act to prevent a loss of income or their own brand being devalued.

“To discourage ‘copy cats’ in the first instance, designers should also look at how they can protect their designs in advance before they release their products to market.”

Aldi has previously been accused of using similar designs when marketing its foods and has faced strong criticism from the likes of Heck Sausages over its packaging design.

Aldi insists that when creating products, it tries to make them “easily recognisable” and uses “industry standard colouring”.

Aldi has previously stated: “We go to great lengths to ensure that we adhere to strict copyright guidelines.”

“This trend of utilising similar designs is definitely worrying and merits greater consideration of the current rules surrounding copyright,” added Mark.

“The advice is always to seek immediate legal advice if you feel your design rights or copyright has been misused by another company.”