A London media law firm has become what is believed to be the UK’s first legal practice to accept the virtual currency bitcoin in payment for its services.
Sheridans, which provides services to the IT sector, said it had been invited to accept the digital currency by a number of clients as an option, although it continues to issue invoices in sterling.
Bitcoin dates back to 2009, although the idea was first mooted in the late 1990s. It describes itself as a “consensus network” that enables a “completely digital money” that is “pretty much like cash for the internet”.
Eitan Jankelewitz, an associate solicitor in Sheridans’ digital media group, said the firm uses a payments processing company that converts bitcoin into sterling and makes a cash payment at the end of each day.
He said fluctuations in the value of the digital currency – which can be significant and are a deterrent to some from its use – are kept to a minimum. Clients making payments do so based on a calculation that is only valid for 15 minutes, after which time the payment would be re-calculated.
“In this way, we are locking the price at the sterling price. You only have 15 minutes’ worth of volatility risk,” said Mr Jankelewitz, adding that most merchants that accept bitcoin operate in this way.
He said that although the firm was accepting bitcoin payments like any other payment, to remain compliant with rules on client money, the firm used it only in relation to settlement of its bills and not payments on account. Also, it would not accept bitcoin for small payments.
Mr Jankelewitz specialises in e-commerce and internet marketing, plus various aspects of IT law, and advises bitcoin exchanges, bitcoin ‘miners’ and businesses accepting payment in bitcoin. He said the firm had considered the move carefully: “It wasn’t a decision that was made overnight; we considered it in depth and consulted all the relevant members of the partnership.”
Nigel Miller, a founding partner of Fox Williams LLP and head of its technology and digital group, advised exercising “caution” with bitcoin, although he said: “It shows a direction of travel for digital currencies. I think there is a future for it – not necessarily bitcoin but for some form of electronic currency.”
He added that he was “a bit sceptical about it from a law firm point of view” at this stage. “I think the day will come, but I’m not sure it’s here yet for us.”
Bitcoin describes the infrastructure that makes the technology possible as a “decentralised peer-to-peer payment network that is powered by its users with no central authority or middlemen”. The value yesterday of one bitcoin was about £365, but it was worth over £400 some four days earlier.
A recent report by financial services company JPMorgan suggested bitcoin is a “vastly inferior” currency to established currencies that is “quite unlikely” to be recognised as legal tender by world governments.
A briefing by home counties law firm Tees Law predicted bitcoin would become the subject of legal disputes: “The reality is, if virtual currency has a value then owners will want it to be protected by UK law and legislators will want to regulate it.”