The NYC Bar Formal Opinion 2019-5 cryptocurrency analysis turns on one word: required. If the fee agreement forces the client to pay in crypto, a demanding conflict rule kicks in. If crypto is one option among several, it does not. Read the opinion itself, and the architecture is unusually clean. The Professional Ethics Committee sets out three fee arrangements, runs each through a single rule, and gives two of them a yes and one a no. Most summaries flatten this into “New York lawyers can take Bitcoin.” That misses the part practitioners need. This article explains a published ethics opinion for a general audience. It is not legal advice, and it does not create a lawyer-client relationship. Read the opinion on nycbar.org and consult ethics counsel before changing your firm’s billing practice.
What NYC Bar Formal Opinion 2019-5 Cryptocurrency Guidance Decides
The digest is a single sentence: a fee agreement requiring a client to pay for legal services in cryptocurrency falls under Rule 1.8(a) of the New York Rules of Professional Conduct if the client expects the lawyer to exercise professional judgment on the client’s behalf in negotiating that agreement. Where it applies, the lawyer must satisfy the rule’s procedural requirements first.
Two rules are in play, and they stack.
- Rule 1.5(a) bans excessive or illegal fees. It applies to every arrangement, always.
- Rule 1.8(a) governs business transactions between lawyer and client. It applies only once a three-part threshold is cleared.
Rule 1.8(a) is the harder standard, and the Committee says so outright. A fee that is neither excessive nor illegal under Rule 1.5(a) is not automatically fair and reasonable under Rule 1.8(a).
Who issued it, and when
The Professional Ethics Committee of the New York City Bar Association, also cited as ABCNY or NYCBA. The City Bar’s own report page dates the opinion July 10, 2019. The opinion’s footnotes record websites last visited July 11, 2019, and most secondary citations, including Virginia Legal Ethics Opinion 1898, use July 11. Either date points to the same document.
It is advisory, not binding law
City Bar ethics opinions carry no disciplinary force on their own. Courts and grievance committees treat them as persuasive authority. Read 2019-5 as the best available forecast of how a New York disciplinary body would analyze a crypto fee, not as a rule you can be charged under.
The Three Fee Scenarios the Committee Tested
Everything in the opinion hangs on these three drafting choices.
| Scenario | How the fee is written | Rule 1.8(a)? |
| 1 | Flat fee of X units of crypto, or hourly fee of Y units of crypto | Yes — business transaction |
| 2 | Hourly rate in U.S. dollars, payable only in crypto | Yes — business transaction |
| 3 | Hourly rate in U.S. dollars; client may, but need not, pay the equivalent in crypto | No — ordinary fee agreement |
Scenario 1: The fee is denominated in crypto units
The Committee calls this arrangement possibly unrealistic, then treats it as a business transaction anyway. The parties would have to negotiate the exchange rate on any given day, conversion fees, whether and when conversion happens, which exchange gets used, which coin or blend of coins counts, and how a disagreement over any of it gets resolved.
An unsophisticated client, facing that list, may place unwarranted trust in the lawyer to sort it out fairly. That is exactly the risk Rule 1.8(a) exists to catch.
Scenario 2: Dollars quoted, crypto mandatory
Fewer moving parts. Still a business transaction.
Three deal points survive: which cryptocurrency, the rate of exchange, and who bears the processing fees. The Committee flags this as the more realistic of the two, which makes it the version most firms will draft without noticing what they have triggered.
Scenario 3: Dollars quoted, crypto optional
Rule 1.8(a) does not apply. The client is billed in dollars and may settle in the crypto equivalent at the time of payment, or may not.
Why “optional” works as a safe harbor
The reasoning is short. When crypto is one payment channel among several, there is nothing for the two sides to negotiate on which their interests diverge. Crypto becomes a way of transmitting money, nothing more. The Committee compares it to paying legal fees by credit card, citing NYSBA Formal Opinion 1050 (2015).
One caveat sits in the footnotes. Lawyers do not ordinarily advise clients on the merits of paying by check versus card. But if a client asks for tax advice about paying in crypto, the lawyer’s own interest in getting paid may create a Rule 1.7 conflict that has to be worked through before any advice is given.
Why the Committee Treats Cryptocurrency as Property
Despite the name, the opinion concludes, cryptocurrency currently behaves more like property than like currency. That single move carries the rest of the analysis.
The variables that force a negotiation
Swap a painting, a vehicle, or a parcel of land for legal work, and you would haggle over valuation, timing, and fees. Nobody disputes that those are business transactions under Rule 1.8(a). The Committee saw no principled reason to treat a Bitcoin payment differently, and cited a line of New York precedent to prove the point: taking stock as a legal fee, taking a mortgage interest in a client’s home, and taking a security interest in client property have all been held to trigger the rule or its predecessor, DR 5-104(A).
New Hampshire reached the same place in 2017 for fees paid in goods or services. Two federal decisions, one refusing to enforce a stock-for-fees retainer, one applying the rule to a lien on client property, point in the same direction.
The expiry condition almost nobody cites
A footnote does the most important work in the document for anyone reading it today. The Committee grounds its business-transaction conclusion in the state of the crypto market as it stood in 2019. If the market later reaches a threshold of stability comparable to regulated currencies, the Committee says the analysis may change.
That is a self-dated holding. No successor crypto fee opinion appears in the City Bar’s cryptocurrency report archive as of this writing, so 2019-5 still stands, but the argument for revisiting it is written into the opinion itself.
The Three-Part Rule 1.8(a) Threshold Test
Three questions have to be answered yes before the compliance steps apply.
1. Is it a business transaction?
Broadly, any business or commercial arrangement between lawyer and client. Partnerships and joint ventures qualify. So does a lawyer buying a client’s boat or a client buying the lawyer’s car.
Two carve-outs matter here. Comment [4B] exempts standard commercial transactions in services the client already markets to the public, banking, brokerage, medical services, utilities. Comment [4C] exempts ordinary fee agreements struck at the start of the relationship, because those are easy to understand and involve no complex negotiation.
Crypto escapes both carve-outs precisely because it is nonmonetary property.
2. Do the lawyer and client have differing interests?
This step is specific to New York. ABA Model Rule 1.8(a) reaches every business transaction with a client whether or not interests differ. New York kept the differing-interests requirement inherited from DR 5-104(A). Rule 1.0(f) defines it broadly: any interest that adversely affects the lawyer’s judgment or loyalty.
The Committee’s reason for finding differing interests in scenarios 1 and 2 is sharper than ordinary fee haggling. Because crypto moves fast, a lawyer holding a crypto-denominated fee has a live incentive to time the work — speed it up or slow it down, so payment arrives when the coin is high and can be converted immediately. The client’s interest runs in the opposite direction. Day-to-day swings in the U.S. dollar are trivial by comparison, absent a catastrophic event.
3. Does the client expect the lawyer’s professional judgment?
Fact-specific, case by case. The Committee borrows three factors from a 2016 New York State Bar opinion.
The sophistication factors
- Whether the client has other counsel on the matter, an in-house legal department, for instance.
- Whether the lawyer is responsible for the client’s matters in that subject area.
- Whether the client is an individual or an entity, and how sophisticated the client is in legal matters.
A crypto-native client may understand the payment mechanics better than the lawyer does. Where that is true, relying on the lawyer’s judgment would not be reasonable, and the test fails.
Asking questions cuts the other way. If the client asks when a payment gets valued or how the exchange rate is set, that alone can signal reliance. Where the lawyer does not intend the client to rely, the opinion is blunt: put the disclaimer in writing, and then do not undercut it by giving advice anyway.
What Compliance Actually Requires
Three steps, each documented, all completed before the agreement is entered.
Fairness plus written disclosure
The transaction must be fair and reasonable to the client, with terms disclosed in writing in language the client can reasonably understand. How much explanation is enough depends on the client’s sophistication and the deal’s complexity. The Committee warns explicitly against leaning on standard form language.
Written advice to seek independent counsel
Tell the client in writing that consulting separate counsel is desirable, then allow a real opportunity to do it. This requirement reflects the heightened scrutiny courts have long applied to lawyer-client business deals.
Informed consent, signed by the client
The client signs a writing consenting to the essential terms, the lawyer’s role, and whether the lawyer represents the client in the transaction. Informed consent has a defined meaning: the client must also have understood the material risks and the reasonably available alternatives.
Placement is flexible. The engagement letter works, and so does a separate document, as long as every element is there and the mechanics are settled at the outset rather than argued about later.
What Opinion 2019-5 Deliberately Leaves Open
The closing footnote lists what the Committee did not decide. Three gaps, and this is where most of the real exposure sits.
- Trust accounting. Whether and how a lawyer may hold cryptocurrency in trust for a client or a third party under Rule 1.15.
- Custody and cybersecurity. Whether the firm has technology controls adequate to hold crypto and defend against outside attack under Rule 1.1.
- Criminal and AML compliance. Whether the lawyer and client have complied with applicable securities and anti-money-laundering law, under Rules 1.2(d) and 8.4(a).
The opinion says only that a lawyer would be prudent to resolve these before agreeing to be paid in crypto. It offers no answers.
How 2019-5 Lines Up With Other Jurisdictions
New York was early but not alone. When 2019-5 was issued, the Committee noted Nebraska as the only other state ethics body to have addressed the question.
| Jurisdiction | Opinion | Core holding |
| Nebraska | Ethics Adv. Op. 17-03 (2017) | Virtual currency is property; no per se ban; convert to dollars promptly on receipt |
| New York City | Formal Op. 2019-5 (July 2019) | Required crypto payment is a business transaction under Rule 1.8(a); optional payment is not |
| North Carolina | 2019 FEO 5 (Oct. 2019) | Virtual currency may be a flat fee if not clearly excessive; parties must agree on valuation at the time of the transaction |
| District of Columbia | Ethics Op. 378 (June 2020) | Permitted if the fee is reasonable; advance fees trigger Rule 1.8(a); strong duty to safeguard the asset |
| Virginia | LEO 1898 (2022) | Agrees with NC, DC, and NYC that an advance fee in crypto has the qualities of a business transaction |
| Ohio | Op. 2022-07 | Addresses acceptance of cryptocurrency for legal fees |
The pattern is consistent: every body lands on property, and nearly all route through Rule 1.8(a). New York is narrower in one respect, because of the differing-interests requirement the ABA dropped. It is broader in another, because the Committee analyzed hourly billing denominated in crypto units, not just flat fees, and treated it as workable once Rule 1.8(a) is satisfied.
A Pre-Acceptance Checklist for New York Firms
- Decide required versus optional first. That one word determines whether Rule 1.8(a) applies at all.
- If optional, quote in dollars. Accept the crypto equivalent measured at the time of payment.
- If required, budget for the full writing. Fairness disclosure, independent-counsel advice, signed informed consent — all three, before signing.
- Name the specifics. Which coin, which exchange, the exact valuation moment, and who pays conversion fees.
- Write the dispute clause. Say in advance what happens when the two sides disagree about valuation.
- Settle custody before the first payment lands. Rule 1.15 and Rule 1.1 are unanswered by the opinion, not excused by it.
- Run source-of-funds diligence. Anti-money-laundering exposure is explicitly left to the lawyer.
- Re-check the authority. 2019-5 carries its own conditional expiry, and other states keep issuing guidance.
Final Words
Opinion 2019-5 is narrower than its reputation. It does not ban crypto fees, does not require conversion on receipt, and does not address trust accounts or custody at all.
What it does is force a drafting decision. Make crypto mandatory, and you have entered a business transaction with your client, with everything Rule 1.8(a) demands. Make it optional, and you have accepted a payment method, the way firms accepted credit cards two decades ago.
The Committee also wrote its own sunset clause. The property analysis rests on 2019 market conditions, and the opinion says plainly that a stabler market could change it. Check for newer guidance before you rely on this one, and read the primary document, which is short, well organized, and published free on nycbar.org.
Frequently Asked Questions
Can New York lawyers accept cryptocurrency as payment?
Yes. Formal Opinion 2019-5 does not prohibit crypto fees. It addresses which ethics rule governs them. If the client is required to pay in crypto, the arrangement is a business transaction under Rule 1.8(a) and carries extra procedural duties. If crypto is simply one option, the ordinary fee rules apply.
What is the difference between Rule 1.5(a) and Rule 1.8(a) here?
Rule 1.5(a) prohibits excessive or illegal fees and applies to every fee agreement. Rule 1.8(a) governs business transactions with clients and adds three requirements: fairness with written disclosure, written advice to seek independent counsel, and signed informed consent. The Committee notes that clearing Rule 1.5(a) does not automatically clear Rule 1.8(a), which sets a more demanding bar.
Does Formal Opinion 2019-5 cover holding crypto in a trust account?
No. The opinion expressly leaves that open, along with cybersecurity controls for custody and compliance with securities and anti-money-laundering law. It flags all three as issues a lawyer would be prudent to resolve independently before accepting crypto.
Is Formal Opinion 2019-5 binding on New York attorneys?
No. City Bar ethics opinions are advisory. They are frequently cited as persuasive authority by courts, grievance bodies, and other bar committees; Virginia’s LEO 1898 cites this one directly, but they do not carry independent disciplinary force.
Why does the opinion treat cryptocurrency as property rather than currency?
Because converting crypto to dollars involves negotiable variables that dollar payments do not: exchange rate, conversion fees, timing, choice of exchange, and choice of coin. That negotiation resembles trading a painting or a vehicle for legal work, which is a business transaction. The IRS reached a similar property classification for tax purposes.
Could this opinion be revised?
The Committee built in that possibility. Its conclusion rests on the state of the crypto market in 2019, and it states that if the market achieves stability comparable to regulated currencies, the analysis may change. No replacement crypto fee opinion appears in the City Bar’s cryptocurrency archive as of this writing.
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