Do you have a crypto-related business?

Cryptocurrency is the way of the future. For years, cryptocurrency and companies within the cryptocurrency space have been operating in a different manner from what we consider a typical corporate structure. Either there is no formal structure or the legal setup does not comply with the activities being done within the company. This is changing very quickly.

Numerous Crypto companies are now looking to capitalize on the popularity of cryptocurrencies, launching blockchain-based legal structures or structures that offer coins or tokens as initial offerings (a so-called token generation event). The appeal of launching in the crypto space is clear – decentralization, anonymity, and freedom of movement of capital are big plus points for cryptocurrencies. However, the same rules and regulations that would encumber a traditional company do still apply.

How does a crypto company formalize its activities when cryptocurrencies are, in essence, meant to be decentralized?

This is actually a challenge. Many spaces have their own rules (think about a DAO). Having an absence of centralized laws within the company’s ecosystem can subject a party to heavy fines or legal liabilities down the road. That’s why Firm EU suggests incorporating a structure that works for the crypto company as soon as possible. Just because the current system and laws aren’t quite as obvious as those of traditional corporations doesn’t mean they don’t exist or won’t become more solidified in the future.

A corporate structure is a must when you are generating a token or creating a startup on the blockchain. Regardless of the current laws and regulations, there are certain principles of corporate law and tax law that all companies must adhere to.

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Crypto funds

A crypto fund is an investment fund that invests primarily in cryptocurrencies or stocks within the crypto space.

Personal holdings

If you are an investor in the crypto market, then you need a solid plan on how to repatriate your crypto investments once you are ready.

Trading entities

Trading, unlike investing, is generally considered an active activity for tax purposes and is taxed with the applicable corporate income tax rate.

TGE structures

A token generation event structure can also be called an ICO-structure. In principle, such structures are used when companies are developing a new token and would like to bring this to the market.

Crypto licensed structures

Some activities are regulated by local financial regulators. Examples of these are:  Setting up a crypto exchange platform; Setting up a company that can provide wallets for clients. 

DAO set up

The anonymity and decentralized nature of crypto impacts how governance is handled. The same rules that would affect traditional startups and corporations either don’t necessarily apply to the DAO.

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