A Bridge Between Legal and Technology
“As a regulatory lawyer in financial services, I became interested in blockchain because it offered a huge opportunity for growth,” said Lilya Tessler, one of Sidley Austin’s newest partners and the head of their FinTech and Blockchain group in New York. “It allows me to analyze traditional regulatory practices and how it applies to new technologies. It is a creative way to look at the law.”
Tessler, who is a frequent speaker and writer with a focus on distributed ledger technology, blockchain and digital asset trading platforms; sat down with Hehmeyer Trading + Investments to talk more about her experience in the blockchain legal eco-system.
Making the Move to Crypto
“I had been focused on broker-dealer regulations that are not written to support a decentralized model and traditional legal practices,” said Tessler. “In the FinTech space, we were working with Robo-advisors and high frequency trading firms. It was about two years ago, I started looking at blockchain and working with companies that were developing distributed ledger technologies and other trading tools specifically for this new asset class.”
Tessler continues to service domestic and international broker-dealers as well as financial services firms but expanded her practice to include token offerings, digital asset trading platforms, blockchain companies and cryptocurrency funds.
“Moving jobs recently, the genesis was looking for a firm that had extensive regulatory expertise in this space and saw the long term growth capabilities in blockchain,” she said, about her move to Sidley. “I think we will see a lot more disruption of blockchain and other technologies in the future. There will come a time of mainstream adoption when people will be using blockchain without thinking about it.”
A Bridge Between Legal and Innovation
Tessler says that she is a bridge between legal and innovation. She helps her clients navigate around the existing regulations because the way laws are currently written may prohibit these technologies from growing.
“I have active conversations with the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission and FINRA on behalf of my clients,” she said. “We discuss how best to address their challenges and how to offer more guidance and areas of relief.”
Her experience with the SEC has been a positive one.
“They have been responsive about projects in blockchain,” she said. “Our interactions have been welcoming and they are trying to figure out their role in all of this.”
She believes it is hard to generalize on where they are going or predict their views. However, in her experience, they have been open-minded about their roles and done a good job of educating the public when it comes to the negative news.
“There is a lot of news in this space. There is a lot of fraud and market manipulation due to the hype around it,” she said. “But regulators are doing a good job in prosecuting these cases and highlighting the importance that investors need to be educated.”
The Development of a New Asset Class
Tessler, sees the benefits of blockchain adoption. She testified before the New Jersey Assembly Science, Innovation and Technology Committee on the economic development opportunities presented by blockchain technology innovation.
“I provided a regulatory update on federal and state laws relevant to blockchain technology and addressed questions raised by the committee on the topic,” she said. “Blockchain has a lot of use cases that offer benefits to different industries and I view crypto, especially digital tokens, as an investment vehicle but it’s important to remember we are in the early stages of the technology adoption.”
She believes we need to give the infrastructure for trading digital security tokens time to develop.
“The issue is the secondary infrastructure is not developed yet in the trading ecosystem,” she said. “Currently there aren’t enough exchanges to trade the digital assets.”
In conclusion, Tessler enjoys what she does and doesn’t see it as work.
“I am part of this new enterprise that is growing and we don’t know where it’s going yet,” she said. “The comparison is to the Internet. It’s something new but people were hesitant about it first. Now the Internet is an every day occurrence in people’s lives. You can’t envision it until you are living it.”