Aaron Brogan—founder of the crypto boutique Brogan Law PLLC—joins us this week to share a practitioner’s perspective on entrepreneurship, advising clients through legal uncertainty, and policies impacting DeFi, tokenization, stablecoins, founders, and investors.

Q1: To start, what is Brogan Law and what motivated you to launch your own boutique firm focused on crypto and emerging technologies?

A1: First of all, thank you George for having me on. I’m a big fan of what you do here so it is an honor. Like you, I was in Big Law before I started my business. Started my career at Weil Gotshal and then I was the first hire into McDermott Will & Emery’s blockchain group. I did a lot of really interesting, high leverage legal work there for some of the largest entities in the cryptocurrency industry. But, as it goes, after a few years our group had grown and I wanted to do my own thing, so I left and started Brogan Law.

My thesis when I started the firm was that I could provide elite-quality legal services at half the price of BigLaw. Something I observed as a young lawyer was that small, inventive startups often had some of the most interesting legal problems, but the BigLaw system is not designed to serve them. I knew I could provide the highest quality work, so I thought it would be a compelling product. We’ve proven that thesis.

Q2: What’s been the biggest challenge in building your firm?

A2: When I started, I thought I was one of the best so-called “crypto lawyers” in the country, but nobody knew who I was. So I spent a huge amount of energy building brand reputation through writing and speaking. That got me clients, but then comes the problem of recruiting high quality attorneys to service those clients. I lead all my cases, but I can’t do it alone. Essentially, as the founder of a firm, you are the fuse sitting between two highly sophisticated, discerning groups of people. On one side, the founders and business owners who need legal services, and on the other, elite legal talent. And you have to bring these two groups together seamlessly and hold them together while either one, by virtue of their status, has a dozen other options they could choose. BigLaw gives you resources to manage this problem, but all I have is force of will, and it’s hard.

But the challenge is what makes it fun!

(By the way, if it is not clear, we’re hiring.)

Q3: What are some of the most common legal issues or pain points your crypto clients face?

A3: Every business is different. Even now, the law makes it difficult to operate a cryptocurrency business in the United States. I think the first points I would highlight is (i) many DeFi products face difficult paths to domestic legality, particularly to the extent their products are colorable as “derivatives.” Crypto people prefer the CFTC to the SEC as an industry regulator, but the CEA is unforgiving. This has been changing a little bit, you saw former CFTC commissioner Summer Mersinger talk about forging a path for crypto darling perpetual swaps (perps) before she joined the Blockchain Association. Since then, Acting Chair Caroline Pham has gone even further, saying that perps are already legal. Bitnomial actually self-certified a product of this kind in April, and Coinbase has announced its own. But the truth is, while perps may be breaking through, the paths to offer any derivative as an unregistered entity is extremely difficult, and will continue to be so going forward.

Second (ii), tokenization and RWAs have treacherous paths to domestic use. This is something we wrote an SEC comment letter on recently with our client Etherfuse. The big issue in the space is that tokenization platforms tend to meet the criteria of investment companies under the Investment Company Act of 1940, and that means they either must register (generally infeasible) or rely on a couple of exemptions that are highly limiting to selling these tokens domestically. There are other limits that tend to make these tokens illiquid on secondary markets as well. My view, this makes no sense. We should foster this market and modernize domestic capital markets, and that is why I do so much writing and policy advocacy on this issue. But the pending Clarity Act (“CLARITY”), if anything, will make this problem worse by creating “digital commodity exchanges” that exclude these assets, and I expect this to be a difficult issue going forward.

Q4: How interested are your clients in U.S. policy developments? Have you seen a shift in interest since the new Congress and Administration were sworn in? If so, how?

A4: My clients are all extremely interested in U.S. policy developments, because their business models are completely exposed to the laws of the United States. They ask me to keep them updated on developments in Washington, and that is part of the reason I cover these topics so often on my newsletter and hired the (excellent) reporter Veronica Irwin to supplement that coverage.

While the anxieties are probably a little different today than in October 2024, the core dynamic hasn’t changed. Most of my clients live in the United States and want to do business here, and the disposition of that pursuit rests in D.C.’s swampy hands. I’m just a guy, but I try to influence that process in my client’s favor to the extent I can, by working with industry groups, stakeholders, regulators, and politicians, because I think getting these laws right is more important to the sustainability of my clients’ businesses than any discrete piece of advice I can give them.

Q5: If you could get one amendment adopted to the GENIUS Act, what would it be and why?

A5: I mean, the prohibition on yield is obviously a ludicrous scam against the American people. If I could get it out I would, but I suspect I’d need a few trillion dollars more.

Another thing that I don’t see people talk about is the requirement to maintain collateral reserves on a 1-1 basis. Full collateralization made sense when stablecoins were an outlaw industry, but if we’re coming in and and getting regulated, we don’t need it. Deposit insurance was invented almost a hundred years ago and has successfully prevented any runs on American retail banks (while earning U.S. taxpayers a profit). This model has been pressure tested and proven, there is no reason to regress to the narrow banking like we’re the Hamburger Bank in 1619.

Fractional reserve banking models are integral to the global economy, by, yes, facilitating lending, but also by creating the money supply. If we migrate a meaningful portion of deposit banking to stablecoin models, it will collapse that money supply and precipitate crisis.

I think the 1-1 collateral model for regulated stablecoins is driven by nothing but path dependence and anchoring, and everyone involved will come to regret consecrating this into law in the years ahead.

Q6: Do you think CLARITY will lead to more crypto projects launching and raising capital in the U.S.? What are one or two changes you would like to see to make it more founder-friendly or innovation-forward?

A6: I am not sure whether it will or not. There are certainly plenty of projects launching right now in the United States, but there is no doubt that the lack of legal clarity makes their path to success more difficult. CLARITY will give a clear path to legality, but it requires a type of “maturity” to get there that, frankly, not one of my clients would choose on their own. The law requires that a blockchain system “is not controlled by any person or group of persons under common control,” and this may surprise you George, founders tend to want to be in control of the projects they build.

So, will projects contort themselves to conform to this law’s vision to operate legally? I’m sure many will. But huge swaths of the industry — anyone who wants to build RWAs, anyone who wants to maintain long term control of their project, anyone building more sophisticated derivative tokens, will be left out in the cold.

Since cryptocurrency exchanges will convert into “digital commodity exchanges” and will be prohibited from listing any of these verboten tokens without dual registration, I think the law could have a chilling effect on the growth of these segments in the United States. I don’t know what happens to something like PAXG in a CLARITY world, for example.

I understand that Democrats won’t play ball with a less restrictive law, and as painful as that is for the people who have invested time in this bill, maybe it is a blessing in disguise. As I’ve become more deeply involved in this process, I’ve come to think that no law at all, and instead exemptive rulemaking at the agency level, might be a better path forward.

Q7: Stablecoins and market structure legislation have taken center stage these last few months. What are some other crypto-related policy issues you’d like to see get more attention—either from Congress or the Administration?

A7: Well, I mentioned before the comment letter we wrote with Etherfuse. What we proposed to the SEC, basically, was a series of exemptive relief. The securities laws include these clauses that allow the SEC to make exemptions from them “to the extent that such exemption is necessary or appropriate in the public interest and is consistent with the protection of investors.”

Commissioner Hester Peirce has proposed a Rule 195 Safe Harbor, that I think could be a good start by basically doing most of what CLARITY does but without itself being a law that is next to impossible to change. But I think we can get much more creative and more aggressive with it. This relief is conditional, so you can really imagine any regime you want (subject to certain limitations) within these rules. This is what I think the industry should pursue, and I think they will if CLARITY starts to look dead in the water.

Q8: Moving legislation through the House and Senate is never easy. What are some actions you’d like to see regulators take to provide crypto market participants clarity while Congress continues to work through the lawmaking process?

A8: A couple months ago, I wrote about the accredited investor rule with my friend and colleague Matt Homer from The Venture Dept. Last year, Tim Scott introduced legislation to open up the rule and implement a commonsense test to allow more Americans to make private investments. I read the securities laws closely, and I think the SEC could implement these reforms through rulemaking alone. No law needed. This would be an incredible crypto policy because projects could sell through existing exemptions like Reg D, and with a broader (and fairer — the current rule is based on income alone) base of accredited investors, there would be a credible opportunity for those assets to trade through something like an ATS.

Q9: If you could offer one piece of advice to a crypto founder building in the U.S. today, what would it be?

A9: Founding a business is choosing to be a sponge for pain. The benefit is that you get control, freedom — you take an idea in your mind and make real things happen in the world with it. That is beautiful and intoxicating. But the downside is that once the ropes are cut away, it is on you, and only you, to make this thing work. That means constant failure, worry, and discomfort.

I read Shoe Dog last month and I was struck by something Phil Knight said at the end.

“The cowards never started, and the weak died along the way. That leaves us.”

You can reach me at aaron@broganlaw.xyz. Thanks for having me on George.

****

If you enjoyed this Q & A and want more of Aaron’s analysis on crypto law and policy, check out the Brogan Law newsletter here.

Thanks for reading and enjoy your weekend.

-GSL