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Why Your State Is Ideal for Blockchain Technology

teakelllawcom on June 6, 2018

Texas is a state ideal for blockchain technology. Going way back to our origins, we have treasured and utilized our independence in trying new things, making the most of them, and standing out from the crowd.

Blockchain is yet another frontier the Lone Star state is on its way to conquering, and what makes it the ideal place for the technology to grow and prosper bolls down to the following:

Pro-Business Environment

Texas is considered one of the most pro-business states in the US. This isn’t due to any one factor, but multiples. For starters, there is no corporate or individual income tax, attracting residents, investors, entrepreneurship, and major established companies.

Secondly, Texas is loaded to the hilt with all modes of transport — an especially attractive feature for companies that ship goods to and from destination points. These same companies are finding the shipping environment ideal for blockchain implementation in order to find and grow efficiencies for their businesses.

Thirdly, Texas has a highly-skilled and educated workforce. Also, through the Texas Enterprise Fund, they have managed to attract billions of dollars in corporate investment and tens of thousands of jobs based on a small fraction of those investments in incentive offerings.

Innovation

Business and growth attracts innovation, and it combines to create a cycle of prosperity that feeds on itself. Innovators look for new solutions to age-old problems, and right now, blockchain technology is giving them a platform to cut costs, eliminate inefficiencies, and promote transparency in all things.

In other words, blockchain technology is more useful as a platform for business than it is as a dodgy virtual currency. Since Texas has embraced its role as the business state, this innovation will come along with it, especially now that companies are seeing ways they can eliminate waste and grow their bottom lines.

But One Thing to Remember About Blockchain Technology

It’s still a relatively new tool, and there isn’t much litigation or regulation on it. It’s difficult to determine how courts will handle disputes that may arise on it or as a result of its implementation.

If you’re an established company or young entrepreneur, you’ll need to watch what legislators and the courts do with it moving forward. This requires a certain degree of legal knowledge, and John Teakell has more than 30 years working in a variety of legal sectors, including a tenure with the US Securities and Exchange Commission. If you have any questions or require legal assistance surrounding this developing area of law, reach out today or stop by the office at Turtle Creek Blvd.

Blockchain: When Is It Useful, and When Is It Not?

teakelllawcom on June 4, 2018

Blockchain has become the latest trend in technology, and with good reason. Not since the first rollout of the Internet has there been a development that promises to change life as we know it. But while there was a sense that everyone had to be on the Internet or else get left behind, blockchain isn’t for every person or every company.

At least, not for now.

Until the digital ledger tech plants deeper roots, it likely will remain on the outskirts of the average American’s life. If you are wondering when and where to use blockchain, let this be your guide.

Transparency Initiatives

If you run a business where transparency with the public is good for the bottom line — think banking or healthcare, for instance — then blockchain could be a good overall tool. It will almost certainly disrupt current practices, but in place of that, it will save money through efficiencies that allow you to focus your efforts into more profitable ventures.

Tracking Shipments

Imagine you’re in a food industry and one of your shipments contains contaminated meats or vegetables. Rather than tracking down and discarding the whole shipment, blockchain allows you to be laser-precise in your focus to where you can isolate and eliminate the contamination point while holding onto perfectly good inventory that would have otherwise been destroyed.

Reducing Cybersecurity Threats

Losses caused by cybersecurity deficiencies are expected to reach $6 trillion globally by 2021, or around one-third of the current national debt. Blockchain cuts the risk by transmitting all relevant data over peer-to-peer networks that force hackers to gain control of over half the participants on the blockchain in order to have control over data changes and additions.

When Blockchain Isn’t Useful

We’ve just shared three of the scenarios that can most benefit from blockchain, but there are circumstances where you’ll want to leave it alone. If you have no defined use, it’s difficult to experience gains from using it. Likewise, a blockchain is only as good as the entities using it. If you’re alone in your desire to be on it and can’t find willing partners, then you’re better off letting it rest.

Where Are You on the Blockchain?

New technologies can be intimidating. With blockchain, this can present an especially concerning barrier to entry because much of the legalities to come haven’t been worked out yet, and it’s only in the early stages of regulation, both federally and stateside.

If you need assistance understanding this area from a legal standpoint, contact John Teakell today. He has unique insight into the inner workings of the SEC as well as years of practice serving plaintiffs and defendants in criminal defense cases, including white collar crime.

Here’s How You Can Get the Most Out of Blockchain Technology

teakelllawcom on June 1, 2018

Blockchain technology is starting to demystify for many industries that see usefulness beyond the questionable cryptocurrency market. Today major companies in freight, healthcare, logistics, and marketing are putting it to use and testing the benefits.

If you’ve yet to move forward with this technology, here are some recommendations for getting the most out of it. Ask yourself these questions.

What Are My Primary Threats?

Think about the type of business you’re in. Are there any 10,000-foot-view challenges that your industry may face that could put some aspect of your company in jeopardy? You don’t have to have an answer for the threat at this point. You just need to know it’s out there, and how it could affect your business in the short and long terms.

Where Are My Inefficiencies?

Every business can do a better job at whatever it does. Where are some of those challenges in your company? Are there any expenses you wish weren’t there? Are there ways to eliminate those expenses? What you’re doing at this point is trying to find applications for a technology that can thrive on finding efficiencies and incorporating a little more transparency between you and your business partners. And that brings up the third two-part question…

Who Are My Partners, and How Could We Improve the Way We Do Business?

A blockchain isn’t very useful without partnerships. But partnerships are only half the equation. You must have some type of need mutually beneficial to everyone on the chain. Think of supply chain participants. If there is a problem with a shipment, blockchain technology can help each company pinpoint where the breakdown occurred and how to fix it.

Transparency is key. It helps companies root out bad business practices, improve upon existing ones, and instill confidence in current and future partnerships.

What Are the Laws Surrounding Blockchain Technology?

This final question is still in a state of flux. Federal and state regulators are still unsure of how to deal with the technology in all of its various uses. Many of those efforts are currently hung up on the world of virtual currencies, but practical business applications of the technology will not be immune. In the months and years ahead, you need counsel with SEC experience.

Dallas-based attorney John Teakell has practiced for more than 30 years in many areas of the law including a tenure as special trial counsel with the SEC. He also believes in continuing education through emerging technologies like blockchain. If you have any questions about it — and its legal ramifications — give him a call today or drop by the website.

How You Can Use Blockchain and Not Get Burned

teakelllawcom on May 30, 2018

Blockchain technology has emerged from the darkness in the last few years. Until recently, it was used synonymously with cryptocurrencies like Bitcoin. With all the questionable practices that surround that market, it’s understandable if you view the technology questionably.

However, blockchain is something being studied and implemented by industry-leading companies across a wide variety of sectors from transportation to healthcare to law. Most agree its transformative abilities will be like nothing seen since the dawn of the Internet.

But how do you know if now is the time to get involved, and how do you keep from getting burned in the process?

Blockchain and Purpose

The first thing your company must have is a purpose. You don’t get into blockchain just because of buzz or bragging rights. It operates on peer-to-peer networks, so it’s not something you do in a vacuum. You need at least one other partner for it to be of value.

And the larger the network, the more secure it will be.

That’s because each individual “block” of data in the chain links to the last. These all must undergo an authentication process by entities on the chain. Hacking something like that wouldn’t be as challenging with only two parties involved, but with several, it becomes almost impermeable. But hacking isn’t the only concern.

The Right Partnerships

Your partners on the blockchain should share your sense of purpose. There should be some reason why it makes sense to them to be included. Maybe you both want to save administrative costs or perhaps streamline redundancies that commonly arise in your shared dealings with one another.

The Right Platform

Once the purpose and partnerships are in place, you need the right platform. There are many in existence and others emerging. The Blockchain in Transportation Alliance (BiTA) is one of the best examples of partners pooling their resources into a blockchain platform that is customized to their specific industry.

Individuals and smaller companies also tend to flock toward Ethereum — also a form of cryptocurrency — for its “smart contract” protocol, which allows execution of contracts without the need of a third party.

Blockchain Protections

The more you can trust the purpose, partnership, and platform behind your blockchain, the safer it will be — and the more sense it will make — to use it for your business transactions.

If you still have questions or you need legal help from an attorney with actual United States Securities and Exchange Commission experience, consider the law offices of John Teakell. He has practiced in multiple areas of law for more than 30 years. Reach out today.

Blockchain Lawsuits: How Will Texas Handle Yours?

teakelllawcom on May 28, 2018

What do we mean by blockchain lawsuits? In simple terms, the underlying technology for cryptocurrencies like Bitcoin likely will become a fixture in courtrooms and legal disputes in the years to come.

A cryptocurrency called Ethereum has devised a way for parties on a blockchain to execute agreements on the blockchain through the use of something called the “smart contract.”

A smart contract by definition is a “computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract.” It can be executed without the use of a third party. Clearly, this has the potential to revolutionize the legal industry, bringing down costs for clients while eliminating many of the disputes and disagreements that arise regarding intent.

How Blockchain Lawsuits Will Actually Work

Much of what we know about the answer to this question right now, is that there is little to actually know. The technology primarily is still in the hands of regulators with no definitive case law to determine how it could or should be handled in court.

One state — Vermont — recently became the first in the US to allow the use of smart contracts as admissible evidence of business records or transactions. The fact other states have been slow to follow suit should highlight the degree of apprehension and uncertainty remaining with blockchain in the legal realm.

Assuming Vermont becomes a model for such matters, Texas could end up admitting smart contracts into litigation. If this were to move forward, blockchain lawsuits could end up requiring expert testimony to verify the legitimacy of contracts for judges who may not be up-to-speed on their coding.

While that could add an additional cost to a legal proceeding, it would probably be a net efficiency given the savings in time and administrative costs that go with moving a case through the legal system.

Texas and Blockchain Lawsuits

Thus far, Texas has adopted a wait-and-see approach to how it handles smart contracts in blockchain lawsuits. For now, the state, through its Department of Banking, has issued one 2014 memorandum offering guidance for money transmitter licensing. But look for this to change in the next year or two as more businesses move into blockchain use to find efficiencies and forge agreements.

Dallas attorney John Teakell has years of experience with matters of financial litigation, and he has kept his fingers on the pulse of this new technology as it relates to legal matters through continuing education. He’s equipped to answer any questions you may have related to blockchain and its future impact. If you need guidance, reach out to him today.

What If You Hate Crypto: Is Blockchain Still Useful?

teakelllawcom on May 25, 2018

More and more people hate crypto and all the talk surrounding its popular poster-children (i.e., Bitcoin and Ethereum). They don’t get why another form of “currency” is necessary — even though it’s actually not a currency without agreement of transactional parties — when cold hard cash does just fine.

Those uninformed on the subject may even translate their hate for crypto onto blockchain, which is the underlying digital ledger technology powering cryptocurrencies in general. What they don’t realize is that blockchain has far more uses than supporting B2B or B2C transactions.

Bottom Line: It Shouldn’t Matter If You Hate Crypto

Blockchain technology has the transparencies and efficiencies that can allow your business to save money and re-channel resources typically reserved for administrative costs into more profitable endeavors. Here are just some of the industries currently using blockchain to make a difference:

  • Transportation: The Blockchain in Transportation Alliance (BiTA) is a consortium of hundreds of freight companies that have agreed to use one platform for the tracking and quality assurance of shipments among other transport-related factors. Many of the biggest shippers in the world have signed on. Expect rapid gains in adoption over the next year.
  • Digital asset management (DAM) software: MediaValet is a company committed to building a robust blockchain consortium among companies that deal with digital assets. “Launching a DAM supply chain industry consortium is a significant first step in leveraging digital asset supply chain concepts and blockchain technologies to solve the interoperability and protocol standardization challenges that have held back the DAM industry to date,” commented Ralph Windsor, Project Director of Daydream.
  • Healthcare: UnitedHealthcare, Humana, and some other entities have signed on to a blockchain that would ensure the accuracy of patient data across multiple providers, thus reducing many of the administrative costs that make healthcare costs so expensive. The effort is in its infancy, having been announced in early April. The players expect it could significantly reduce the $2.1 billion in annual administrative costs. If scalable, this also could make a tremendous impact in the cost of healthcare overall. The next five years will be interesting to watch as major healthcare players roll up their sleeves with blockchain technologies.

Blockchain Is Here to Stay

It’s understandable if you still have questions about how blockchain could influence your business, and whether or not you’re using it within the realms of current laws. There is still much to be determined at the state and federal levels, and experienced attorneys like John Teakell can help you grasp both present and future considerations. If you’re ready to take the next step, give him a call or contact him here.

Do Bitcoin Transactions Need to Be Based in Texas to Be Legal?

teakelllawcom on May 23, 2018

Bitcoin transactions are gaining in popularity across the country, but especially in Texas. While the state does not recognize this virtual currency as legal tender, it does allow the use of it in exchange for goods and services provided. As a result, you’re seeing more Bitcoin-related services and many small businesses allowing its use as a viable form of payment.

Bitcoin has value because parties in each transaction of the blockchain agree that it does. But what about interstate commerce? How does Texas govern such instances?

Texas and Bitcoin Transactions

As the American Bar Association notes, “a merchant that accepts bitcoin or other virtual currencies for its own account in order to facilitate the sale of goods and services will not need (our emphasis) to be licensed by or register with any governmental entity.”

That does not mean it’s the Wild West, however.

If a merchant takes place in the provision of Bitcoin-related services — like, say, money transmission, or holding payment for a good or service from one of two parties to send to the other — then they could need to register with the Texas Department of Banking as a money transmitter.

While that may seem relatively lax from a regulation perspective, don’t expect the lack of scrutiny to continue. The department already is cracking down on companies that blur the lines between simple transactions and Bitcoin-related services.

As the use and acceptance of Bitcoin and other cryptocurrencies changes, expect a greater body of law to rise up around it. Therefore, if you plan on accepting crypto into your business functions, it behooves you to stay up-to-date on any new legal maneuvers or events surrounding it.

But the simple answer to our question: no, Bitcoin transactions do not need to be based in the state of Texas to be considered “legal.”

Is Bitcoin Really Worth It?

What you should be asking of yourself at this point is this question. Bitcoin and its cryptocurrency brethren are extremely volatile, and there’s no sign of when the volatility will end. Before deciding to get involved with it, you must first determine whether it fits the needs of your business and that you’ll be operating within the realms of legality.

John Teakell has many years of experience on both sides of financial law. He’s even held a high-level counsel position with the United States Securities and Exchange Commission. If you have any questions related to this aspect of currency and business, consult with him today. His decades of knowledge and eagerness to help can help you make the best decision for your company.

How to Use Blockchain in Your Business

teakelllawcom on May 21, 2018

It’s safe to say 2018 is the year of the blockchain with more and more major companies like Humana and UnitedHealth announcing their entrance into this form of digital ledger technology. Companies know transparency is what their consumers demand, and they also hope to find efficiencies along the way.

But there is a wide gulf between hearing about blockchain and actually implementing it. Firstly, you have to answer two basic questions:

  1. What is blockchain?
  2. How could it help my business?

Just because something is trending, that doesn’t mean it will be completely right for your business. There may not be great enough demand or a willing partner, so start there. If you do, there are some things you’ll need to keep in mind.

Business Considerations for How to Use Blockchain

Blockchain interfaces will differ from chain to chain. Some companies will want to develop their own in conjunction with their chain partners. Others will use an existing platform.

In simple terms, a blockchain is like a Google Doc that allows anyone on the chain to edit but no one on the chain to duplicate. The blockchain ledger keeps record of all transactions and sends the information as encrypted data across a peer-to-peer network.

This has numerous business advantages: it allows for transparency, helps you track shipments, keep up with outstanding balances. You name it. But it’s only effective if you have two things in place:

  • A need that could benefit from transparency and/or save on administrative costs
  • A partner or partners who are willing to conduct business on the blockchain

Without either of those two elements in place, it can be pretty underwhelming.

Legal Ramifications

Blockchain has the potential to be extremely disruptive. It forces participants out from the shadows with a technological system very difficult to hack. One would have to gain control of more than 50 percent of the computers on the peer-to-peer network running the chain in order to verify sinister changes. That’s because each addition must go through a digital authentication process before being verified to the ledger.

However, that does not mean it’s impossible. Also, legal questions surround purpose, implementation, and compliance.

If you believe your business could benefit from blockchain and you have willing partners but you aren’t sure what the next steps should be, John Teakell can help.

Teakell has decades of experience in legal defense, and his background also includes service as the Senior Trial Counsel for the U.S. Securities and Exchange Commission. While there, he prosecuted civil enforcement actions of fraudulent schemes in white collar cases.

He is equipped to answer your blockchain-related questions and eager to do so. Contact him today.

This Is How Texas Governs Bitcoin in Business Transactions

teakelllawcom on May 18, 2018

While cryptocurrencies and blockchain are still in their infancies, Texas Bitcoin, or “virtual currency” regulations have been deemed “friendly” by crypto insiders.

The Bitcoin Market Journal observes the Lone Star State “has issued memorandums indicating that no money transmitter’s license will be needed to sell altcoins in the state.” Furthermore, the state doesn’t require Texas-based Bitcoin companies to carry a money transmitter’s license when running a custodial exchange for its in-state customers.

Like the federal government, Texas does not recognize Bitcoin as legal money, but rather a taxable commodity. However, it can be used on a transactional basis as it was last September when a Texas brokerage firm closed its first purchase on Bitcoin.

In the following article, we’ll discuss some of the guidance that is available. Let’s start the exchange!

Texas Bitcoin Regulatory Positions

So far, there is limited activity surrounding virtual currencies and, thusly, limited guidance. What we do have comes from Banking Commissioner Charles G. Cooper in an April 3, 2014 memorandum.

Cooper writes that virtual currencies have “raised novel questions in relation to money transmission and currency exchange.” Cooper’s memorandum “seeks only to establish the regulatory treatment of virtual currencies under existing statutory definitions” of the Texas Money Services Act, Texas Finance Code Chapter 151.

Most of the guidance covers cryptocurrency businesses that conduct money transmission. Cooper says that such businesses “must comply with all applicable licensing provisions” of 151 and of Title 7, Texas Administrative Code, Chapter 33. He also highlights these considerations:

  • Minimum net worth requirement under Finance Code §151.307 is $500,000 with a potential increase at the Commissioner’s discretion to a maximum of $1 million based on the factors set out in §151.307(b)
  • License holder cannot include virtual currency assets in calculations for permissible investments under §151.309.
  • Pursuant to Finance Code §151.203(a)(3), applicants handling virtual currencies as money transmitters “must submit a current third party security audit of their relevant computer systems,” Cooper writes, adding that the “new technological paradigm created by cryptocurrencies has brought with it new risks for the consumer” and it is “incumbent on a license applicant to demonstrate that all virtual currency is secure” while they’re in control of it.

The Federal Laws

For further regulatory guidance on Bitcoin, the Internal Revenue Service has issued a few additional factors aside from their take that Bitcoin and other cryptocurrencies are not legal tender. They are as follows:

  • Bitcoin for services rendered is taxed as income.
  • It must be reported on IRS Form 1099 and can be subject to self-employment tax.
  • Taxes on capital gains do apply as they would on stocks, bonds, and mutual funds.

Proceed with Caution

While there is nothing that bans you or your business from dealing in Bitcoin transactions, do be aware that it is not protected as a sovereign currency. That means the source of Bitcoin as well as the channel transmitting it should be toughly scrutinized before entering into any agreements.

If you have questions about the legal ramifications of using Bitcoin in the state of Texas, John Teakell is happy to help. He has more than 25 years of experience in areas of white collar and computer law. Reach out via email, phone, or online submission, or stop by his office at 2911 Turtle Creek Blvd., Suite 300 today.

Gun Restrictions: How You Can Get Into Trouble

teakelllawcom on April 9, 2018

Gun restrictions in Texas are less stringent than in other parts of the U.S., but the Lone Star State does follow federal law, so it’s not exactly the Wild West.

While gun owners can breathe a sigh of relief when living or traveling through our region, they do have to be mindful of the limitations.

In the following article, we’ll be talking about some of the biggies as well as some of the restrictions you might not be aware of. Let’s begin!

The Biggest Gun Restrictions

You must have a license to carry a handgun, and certain individuals are not capable of meeting the requirement. For example, if you are under the age of 21, you can receive a gun; you can own it; but you cannot carry it with you anywhere because “shall-issue” license eligibility does not start until you’ve reached that milestone.

On the flip side, felons cannot own or carry a gun. Fugitives from the law may not carry one either. The difference, of course, is that a fugitive could be proven innocent in which case they will retain all of their rights, but only after they’ve been cleared.

Additionally, individuals who are “chemically dependent,” as per Texas Government Code – Section 411.172, or are “incapable of exercising sound judgment” may not. The “sound judgment” stipulation applies to both the use and storage of the weapon. Someone who lacks sound judgment may include:

  • Schizophrenia or delusional disorder;
  • Bipolar disorder;
  • Chronic dementia, whether caused by illness, brain defect, or brain injury;
  • Dissociative identity disorder;
  • Intermittent explosive disorder;  or
  • Antisocial personality disorder

Licensure is not available to those owing delinquent taxes or child support as well. You also may not be able to openly carry a weapon if it can be determined your intent is to “cause alarm,” and while school restrictions are subject to legislative review, they do have some ability to set up gun-free zones.

What Happens with a Violation?

Violation of gun restrictions can result in fines or imprisonment of varying degrees. The more severe sentences are reserved for felons, and a gun violation may be used for enhanced sentencing purposes.

If you have been arrested and charged for breaking one of the gun restrictions mentioned above, then your first move should be to find experienced representation. Dallas-based criminal defense attorney John Teakell has defended many clients over the years on firearms-related charges.

He has knowledge of how prosecutors and federal law works as well — especially relevant with gun-related charges. Reach out for a free consultation today.