Crypto as share capital: Liechtenstein provides much needed general guideline
Amazing Blocks is proud that the government of Liechtenstein is at the forefront of the token economy by providing a general guideline for incorporation, capital increase, and subsequent liberation with crypto assets. Establishing an entity solely with crypto assets had already been possible before, however, this marks another step forward toward becoming a true hub for blockchain. Especially in times where holding crypto in your treasury increasingly becomes popular, Liechtenstein is once again inheriting a pioneer role amongst regulators. — Author: Nicolas Weber
Share capital in crypto
Using crypto as share capital is increasingly becoming more popular due to the obvious benefits: You create an instant, trustworthy, transparent, and automated infrastructure for your entity’s money. Further advantages include Increased transparency and a bankless establishment of the company which significantly smoothes the formation process when applied correctly. Furthermore, you have a chance at benefiting from the rising crypto prices — given that no setback occurs — a far more lucrative method to “park” money in a low to negative interest rate environment.
Liechtenstein: A true pioneer
Thus far one of the major hurdles for the adoption of this strategy had been simultaneously complying with all laws and regulations that are set. The Principality of Liechtenstein changed this stigma by 1) implementing the TVTG — a thought-through framework for the emerging token economy and 2) publishing a general guideline for crypto as share capital. It had already been possible to found a company solely with the contribution of crypto assets in Liechtenstein without the need for a bank account. This tends to be conducted right before the company has been formally established at the commercial register in Vaduz. To do this, a “non-cash contribution agreement” is required to prove to the commercial register that the founders had deposited the crypto assets.
At Amazing Blocks, we utilized this opportunity with Ether as an initial capital contribution. With the general guideline, the legislature in Liechtenstein provides, any pioneer can now leverage the benefits of this with regulatory clarity. This paves the way for a far more dynamic future of entity governance in general. Templates for e.g. the initial capital contribution with crypto are provided to clients and partners of Amazing Blocks. Our gratitude to the supportive Liechtenstein regulators! A snapshot of the guidelines can be seen in Figure 1 below, the actual guidelines can be sent by an employee of Amazing Blocks upon request!
Future outlook
On March 1, 2021, a report in Bitcoin.com stated that more than 42 companies hold about 1.3 million Bitcoin worth more than $65 billion. This astonishing figure emphasizes how punctual these guidelines are enforced by Liechtenstein. In the future, even more companies and regulators will follow suit and use such a model. This will in turn unlock trillions of dollars which are thus far held in fiat for the crypto markets while also providing far more flexibility for entrepreneurs and their respective endeavors.
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Amazing Blocks offers a tokenization solution that enables its clients to tokenize various assets according to the Liechtenstein Token Act (software-as-a-service). The software covers both the issuance of tokens and investing in tokens. It suits the needs for tokenizing all kinds of assets (e.g. machines, cash flow generating contracts, trademarks, real estate, cars). Imagine that some asset should be tokenized. For this asset, various tokens would make sense: Equity tokens, debt tokens, participation rights as tokens, ownership tokens, or any mixture of these tokens. The software of Amazing Blocks helps issuers to handle multiple assets and to issue multiple tokens for these assets. This is possible by integrating blockchain technology with the law (that is, the Liechtenstein Token Act). At the core, there is the “digital legal entity in Liechtenstein” based on “tokenized shares” which allows a very efficient foundation, a very efficient operation of the company, and, thus, an efficient and flexible possibility to tokenize assets. This should now make a wide variety of tokenization projects possible because the costs for tokenization are significantly reduced.
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Author
Nicolas Weber is Head of Business Development at Amazing Blocks and is your direct contact for any regards. You can contact him via email or connect with him on LinkedIn.
