BlockyDevs Industry Insights Interview with Izabela Kuprasz

Welcome to our latest blog post, in which we speak with Web3 Foundation Legal Director Izabela Kuprasz - an experienced professional who has navigated the legal, financial and now blockchain and Web3 sectors. In this interview, Izabela shares her experiences and insights of her profound shift into the dynamic Web3 landscape, and the exciting opportunities and challenges this new domain presents. Join us as Izabela tells her story, revealing the key moments that have shaped her career and her perspective on the evolving role of lawyers in the rapidly changing blockchain environment. Whether you're a lawyer, a financier, or simply curious about the intersection of these fields and technology, this talk promises rich insights into the complexity and exciting potential of the blockchain and Web3 worlds.

Wiktoria: Tell us about your story: Law and finance, what motivated you to pursue a career in this industry?

Izabela: My story behind the journey into law and finance is pretty cliché - I don’t think I have ever dreamed of becoming a lawyer, but with decent grades at school, it seemed like a reasonable option at the time. In fact, I would venture to say that not many people dream specifically of becoming a lawyer in finance - it's more of an acquired taste. However, my path clearly shows the significance of the initial steps you take in your career, as they can shape your trajectory for many years, if not your entire life. I started my internship at a bank at the age of 22 and stayed there for almost 9 years. I have never expected to stay so long with my first employer but it was definitely the most transformative period of my life. It made me who I am now, as I was very lucky to learn from brilliant people whom I respect to this day. I also loved the complexity and intellectual challenges involved and in such institutions, there is an abundance of them.

Wiktoria: Can you share your journey and how you initially became interested in the blockchain and web3 space? 

Izabela: My journey into the blockchain and Web3 space began with my experiences in the banking industry, where the topic of blockchain started surfacing frequently. Particularly while working with hedge funds, I witnessed firsthand the multitude of inefficiencies within traditional financial systems. The custody chain, for instance, involved numerous banks and intermediaries, resulting in prolonged processes and delays.

These inefficiencies sparked my interest in exploring alternative solutions, particularly within the realm of blockchain technology. The concept of decentralization and its potential to streamline processes and eliminate intermediaries intrigued me. However, it wasn't until I decided to take a career break to embark on a world trip that I truly had the opportunity to reflect on my professional aspirations. Traveling gave me the much needed space to contemplate my next steps after coming back to Switzerland. It was during this transitional period that I stumbled upon an exciting opportunity to work as a legal counsel at the Web 3.0 Technologies Foundation. ‍

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Wiktoria: Why did you decide to change industries from traditional banking to the web3 world?

Izabela: My decision was mainly driven by professional curiosity - it was the sheer novelty and potential of Web3 technologies which made this area so appealing to me. Unlike the well-established legal frameworks in traditional banking, the regulatory landscape of Web3 is still evolving and often presents a fascinating legal rollercoaster.

Engaging with the legal aspects of Web3 is intellectually stimulating, as it involves grappling with complex issues such as privacy, liability, and the legal status of decentralized autonomous organizations (DAOs). These discussions are not only intellectually challenging but also contribute to shaping the future direction of the industry. Also, having a background in finance has been particularly beneficial in navigating many complexities of the Web3 world. 

Wiktoria: You have experience working in both finance and the web3 sector. What are the key differences you've observed in terms of work dynamics, challenges, and opportunities between these two domains?

Izabela: In my case the transition was not only a shift in sectors but also from a large corporation to a much smaller company. I was pleasantly surprised by the level of organization and how well things can be run, even on such a small scale.

It didn’t take me a long time to realize that I’ll be working in a very different environment. One of the first things I’ve noticed is that unlike the traditional banking industry where hierarchical structures are prominent, the Web3 industry operates with flatter hierarchies. Org charts and reporting lines are not such big topics as they are not as crucial to day-to-day operations. I found this concept very invigorating as in this way, ideas can flow freely across different levels of the organization.

Another observation was that despite associating the Web3 industry with people of a more introverted nature, there is a very vibrant event culture. There's a plethora of events such as conferences, meetups, and informal gatherings in the crypto space. You have plenty of opportunities for networking, idea exchange, and community building, which I found lacking in the more formal and reserved atmosphere of the banking sector.

Overall, I think that transitioning into the Web3 sector now is an interesting opportunity which may shape one's career trajectory. However, at the same time it's essential to acknowledge that the Web3 sector can be more volatile, with many projects facing uncertainties. This necessitates a higher risk tolerance, as job security in the Web3 sector may not be as stable on average compared to banking.

Wiktoria: The blockchain and web3 industry has undergone significant transformations in recent years. How do you view the evolution of this industry, and what do you find most exciting about its future?

Izabela: Despite the significant progress made since the inception of Bitcoin, it's fair to say that the blockchain and Web3 industry are still awaiting the emergence of their own "ChatGPT moment" that could catapult these technologies into mainstream adoption. While the finance industry has been quick to recognize and leverage blockchain's potential through initiatives like decentralized finance (DeFi), to me it feels like there's much more to be explored. 

Industries such as supply chain management, healthcare, gaming, real estate, and even governance are ripe for disruption through blockchain technology. The concept of decentralized autonomous organizations (DAOs), for example, has the potential to revolutionize traditional governance structures by enabling transparent and democratic decision-making processes. Another key technology enabling this disruption is zero-knowledge proofs (ZKPs). In healthcare, ZKPs offer a means to securely share patient data while preserving confidentiality. We are all aware that medical records usually contain highly sensitive information, and ZKPs can enable healthcare providers to perform computations on encrypted data without exposing individual patient records. This allows for collaborative research and analysis while maintaining patient privacy.

I think that on many levels this technology is also an intellectual exercise that challenges our conventional notions of means of exchange, the role of intermediaries in our economy, and the concept of privacy. It forces us to fundamentally rethink how our societies and economies function. Witnessing this change is personally a very rewarding experience to me.

Wiktoria: What are some of the unique legal challenges that arise in the web3 and blockchain space and how do they differ from traditional legal work?

Izabela: What became evident to me from the beginning is that I cannot simply apply the same approach I used when working for more traditional institutions to address legal challenges. For example, one of the main challenges is that traditional legal frameworks are built around the concept of centralized entities with clear hierarchies, whereas in DAOs decisions are made collectively by token holders. This is very difficult to reconcile with traditional legal concepts such as liability, governance, and accountability and causes many practical issues, e.g. related to enforcement or entering into formal contracts. In addition to this, in many jurisdictions, the legal status of tokens and their holders remains ambiguous. It goes without saying that this uncertainty can hinder the growth of projects and investment in the space, as participants are unsure of their legal obligations. You also see many DeFi projects operating in a decentralized and permissionless manner. This is a very novel concept, making it difficult to apply existing regulations. Just as traditional legal frameworks were crafted for centralized systems with clear structures, these legal "shoes" are ill-suited for the decentralized, boundary-pushing nature of Web3 technologies.

Wiktoria: You participated in DLT Talents, how do you recall the experience? What does taking part in such initiatives give you. Tell us something more about it.

Izabela: Participating in the DLT Talents program was an experience that I wholeheartedly recommend. What sets this program apart from others is that unlike some other mentoring programs, it has a precise structure right from the outset. It can be a solid foundation for building essential knowledge, especially if you have just entered the web3 space or are considering it.

One aspect I particularly appreciated about the program is its proactive approach to addressing the struggles of many women in their professional lives, such as networking, creating a personal brand, and getting the spotlight. They literally leave you no choice but to address these pain points. For instance, one challenge I encountered was the requirement to publish an article about a specific topic in the blockchain space. While this may seem like a minor task to some, the idea of it made me feel pretty uncomfortable, as I had never done it before. Although now I would have changed so much about it, I was in fact filled with joy when one of my former co-workers said that she read it and really enjoyed it. It was a small thing, but in the end I was very grateful that I did it. ‍

Wiktoria: The city of Zug in Switzerland is often referred to as a "Crypto Valley" due to its prominence in the blockchain industry. From your perspective, what makes Switzerland an attractive hub for crypto and blockchain innovation, and how has your experience been within this ecosystem?

Izabela: Switzerland has emerged as a prominent crypto hub for several reasons, but in my opinion, it is the regulatory clarity that made it a cornerstone for the industry's growth in this country. On 1 August 2021, Switzerland, being one of the first countries globally, took a pioneering step by enacting the DLT Act specifically tailored for blockchain technology. Furthermore, Switzerland's forward-thinking approach was exemplified by FINMA's visionary step in issuing ICO guidelines as early as 2018. These guidelines provided much-needed transparency to the industry at a time when other jurisdictions to this day are still debating the adequacy of existing laws and the necessity for industry-specific regulation. This clearly shows that, contrary to some opinions,  the crypto industry has an appetite for regulatory clarity and if clear and transparent rules are provided, it can thrive.

Beyond regulatory clarity, I think it is also fair to say that Switzerland quickly recognized a compelling business case in becoming a host to the web3 industry. This country generally has many other characteristics that make it an attractive destination for business. Its political stability and business-friendly policies create an environment conducive to entrepreneurship and innovation. Furthermore, Switzerland's robust financial sector played a crucial role in its status as a crypto hub. The presence of established banks and fintech providers offers opportunities for collaboration between traditional financial institutions and blockchain projects. Many of Switzerland’s academic institutions are also actively present in the web3 space, which helps to attract talent.

Lastly, Zug's vibrant community is also a key factor contributing to its status as a leading crypto hub. The city hosts plenty of meetups, events, and conferences related to blockchain and cryptocurrency almost every week. This is certainly a valuable platform for networking, knowledge sharing, and collaboration among industry professionals and enthusiasts.

Wiktoria: As the web3 space continues to grow, how important is it for legal professionals to have a deep understanding of blockchain technology, and what steps can lawyers take to stay informed and competent in this area?

Izabela: I think you have to be realistic about the considerable knowledge gap that exists between legal education and blockchain technology expertise. Having said this, while having a deep understanding of blockchain technology can be valuable, it's not necessary. While some lawyers may choose to delve into learning how to code, I think that being familiar with some fundamental concepts is often enough to evaluate their legal implications. After all, many skills inherent to legal practice, such as critical thinking, analytical reasoning, and problem-solving, are highly transferable and applicable in the context of blockchain technology. Additionally, it's beneficial to try to stay a generalist, as the web3 space requires you to have a good understanding of various areas of law.

I try to stay informed by following various blockchain media outlets and attending industry events, but while it may sound clichè, I’ve simply learned a great deal from conversations with my work colleagues. Nothing can truly replace the value of hands-on experience.

Wiktoria: For entrepreneurs and startups entering the web3 space, what legal considerations and advice would you recommend to ensure a strong legal foundation for their projects?

Izabela: In an ideal world, such a project should be developed with ongoing legal support from a trusted legal advisor. Yet, the reality is that the cost of hiring a lawyer can be often prohibitive for many teams. For this reason, you need to learn very early in the process how to prioritize certain risks over others. Not every battle is worth fighting for, not every contract is important. But at the same time, you do need to get some things right from the very start. For example, choosing an appropriate legal structure for your business, considering factors like liability protection, tax implications, and governance requirements is extremely important. This will not only help you to run your operations more efficiently, but also demonstrates professionalism and reliability to potential investors. It signals that you take your project seriously and are committed to operating within legal boundaries. 

Wiktoria: Thank you Izabela for doing this interview, it was a pleasure to talk to you.

Izabela: Thank you Wiktoria for having me.

The views expressed in this interview are solely those of the individual interviewees and do not necessarily reflect the views or opinions of their employer. Any opinions, findings, conclusions, or recommendations expressed in this interview are those of the interviewees alone and do not represent the views of the organization they are affiliated with.

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