Good country to establish crypto project foundation

Hello, Aragon community!

I posted Aragon for substitutes of legal corporations in nation-states yesterday and asked what are the missing part to establish blockchain company, then I got some feedback.

Throughout the topic, what I felt an important but missing thing for a blockchain company is how to manage real-world assets. Because the blockchain ecosystem is still in its infancy, we have to rely on terms and conditions or other contract flameworks. that may cause troubles because they are based on laws which preassume that both contractors are either a natural person or a legal entity.

So, here we need legal foundations on some geographical location to manage contracts in the real world.
For example,

Ethereum has Ethereum foundation in Switzerland to manage its fund(USD?) and IPs.
Augur has Augur foundation in Estonia.
Zcash has Zcahs foundation in the US.
and Aragon has Aragon foundation in Zug, Switzerland

I assume they choose their foundation location based on some criteria like

  • Crypto friendliness
  • Taxation (Of course 0 % is always good
  • Political stability
  • Simple workflow

What do you think of those ideas?
Where do you think a good place to establish foundation?
What do you think of ideal role of both blockchain company/foundation
and also I’m welcome other thought or anything related.

Estonia and Switzerland are really good bets. I think someone has also eyed Panama, but I don’t remember who or why. Maybe because it’s somewhat of a classical tax haven?

I’m not entirely sure what you mean here, but I am going to assume you mean “what do you think the role of a traditional company is for a DAO”, to which I would answer that it’s mostly hedging. I think that in the short-term, having an actual company (i.e. not a DAO) is probably beneficial because it allows you to interface with the existing markets, which is something you probably need to do almost regardless of what business you’re running (e.g. buying server space at AWS, buying domain names, inventory, …). So it’s sort of a bridge between the “new market” and the “old market”.

So what does a DAO contribute in this setup? Why not just a traditional company? For the following reasons:

  • Set up times for traditional companies are very long and usually also pretty expensive, depending on where you are from. I thankfully live in Denmark, so setting up a new company is virtually free.
  • DAOs are mostly a governance tool, so it brings super nice collaboration tools to the table, especially because it sort of enforces itself. You might have a bad faith actor in your traditional company who is siphoning funds, but it would be very hard in a DAO without someone knowing immediately.
  • If you need to collaborate with people you probably don’t know that well, or even worse, people who don’t live in the same jurisdiction as you, just using a traditional company is a huge pain point. DAOs sort of fix this by being an extra-jurisdictional collaboration tool by default.

I hope that sort of made sense :sweat_smile:

I heard Estonia recently rolled back on crypto friendly regs in a podcast with @light. Can’t remember exactly what but it is a good podcast to listen to anyway

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Something about regulating governance tokens as securities. I did a quick web search and found this that seems to give some legitimacy to this claim (but IANAL)

Tokens are shares, if they grant their owners… voting rights in corporate matters.

I believe the country reputation in cryptosphere + economicshphere are pretty important too. I wouldn’t prefer %0 taxation to establish an entity in a reputable country.

If it’s in EU I’d prefer some specific cantons in CH depending on the custom advantages in each. Also I know that starting from 2020 most of the cantons will have the same tax structure ( at least the base ) so this might be something important to follow.

Estonia is also a good option for the EU as they are in and open minded by the bureaucratic part of the game.

As a sum up, in any case for the long run I believe Reputability & Stability = Success > Short-Mid Term Tax Heaven Illusions.

M

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Thanks. I agree with your point that establishing a traditional (state-backed legitimate) company is for “hedging”. I believe we can find some social agreement where DAOs manage and where traditional companies manage.

Thank you for sharing a good podcast. I’ve listened to it.
@light
By the way, is it possible that changing corporate jurisdiction after establishing a company in one country? If that is possible and easy(in terms of legal flexibility and low cost), we may be able to change company jurisdictions from one physical location to the blockchain.

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