Legal Framework for Web3 in Singapore

Transcript

let's welcome on stage parents away going through a lawyer with the topic please it's a great event [Music] thank you I'm looking forward to talking to you guys about um how we kept ourselves safe I used to run a project and in 2017. I mostly we looked at our lawyer and said how do we make sure to give you an open sale and not go to jail I think some of that is not going to jail it's now how can we stay on the sec's process so a lot of

you guys are engineers and Builders here so I wanted to speak on you guys through the past and future of legal structures in the crypto space and at the same time talk about what we can do now to keep everybody safe and building so some legal disclaimers I am not a lawyer I am not your lawyer it's in red and it's underlined so it's really important I am a Singapore trade lawyer I generally run in my previous but because legal foreign because I didn't train as a lawyer I do

the tax structuring I do the corporate formats but after that you know I hand it off to somebody who actually gets paid to do that and assumes the risk and it's like we'll contact you later so what are legal structures a lot of different companies and countries have different structures I know Vietnam has slightly different legal structures Singapore has different legal structures unfortunately Singapore legal structures are dominant in Southeast Asia because the joke in Singapore between the token 2049 is that there are more physics than Builders the more VCS than theirs and that is true now part of the reason is in Singapore it's very very fast to spin up any one of these legal structures for

business it's generally in three hours and 300 for a company Partnerships are less than that but when you do a legal structure for a business you have to understand what risk and what kind of management control that you're doing so if you're just running a small bubble tea stand then or properly stand the sole proprietorship is fine because you know your liability is limited to you know bad summer the next thing is partnership is you know if you're just a few friends who are building together and your services company and you don't expect a lot of liability then it's also possible because management risk and and all the decisions and work unseparated whether you're doing anything more complex in the space you're raising

capital from outside you are expecting workers You're Expecting the scale then you should look at a company structure uh Vietnam does have company structures the tax um the tax in Vietnam I think the standard 20 Singapore is very attractive for the simple reason the first three years the first hundred thousand of income is exempt if you're not bringing the income back to Singapore you're earning the money in the US you're paying people in Vietnam and the money stays outside of Singapore that money is also not taxed so and then let's get to dance because Dallas are super popular a lot of web3 projects have structured as dials now

the problem is dolls don't really mean anything they can be any one of these things and they should really fall under one of these legal structures but at the same time I believe dials are actually the future of work um dolls as you can see these are what Dallas and governance coins do so they offer liquidity as well as upside for contributors and token holders so we should actually look at how dials are structured and I think there is a way to structure safely I will talk through the ens now example and if you want to do a dial you should get yourself a really good lawyer but these are what those can do in terms of liquidity and balance sheet you know the market cap is 13.5 ba

so the broad categories of dials depending on what kind of web free project you're doing it could fall into this any one of these characters so I mean people I'm just going to leave this up here you can read it um you can buy and build things brain Guild all these other dials they help projects Build Incorporated structure then there are ones that actually operate software and then I'll write charities [Music] now what does offer above normal legal structures is they give a flatter structure more Styles hire extensively

from their dysport or their Community forums um and because they hire from the forums they have they can hire people that intensely align a lot of the people in Bangla saw in other dial Scott can start being noisy on the forums but because they are noisy on the forums you know who's alive you know who gets it you know who is going to be a good hire because you don't have to explain what your organization is about and then lastly you don't have to hire people upright for a big fat fat salary you can give them something small get them started see they're any good and get them on a work-to-end basis so I mean I'm very bullish on dolls because I believe that the future of work if you go back to where we were join

stock companies started about 400 years ago about only crystallized in final form 200 years ago because they're set up to to do International Trade large complex businesses that go internationally that have many stages of work I believe that dials are actually the future of how work can do now the other issue that dials do is that they they kind of unlimited contributors either for time for money so you know holders that 310 000 of them pseudo anonymity a lot of people that work with dials are just a animal picture or a ugly ape or something kind of pump they have radical transparency they take four decisions

that you would normally not do uh but they do it all in real time if you've seen the mega dial fights it's quite intense and it happens on Twitter it happens on governance and there's a lot of experimentation about how voting should happen when we vote most of the time we use the first pass the post this people are experimenting with if you speak more should your vote have more weight so you should your Vote or your shares be tied to your reputation so there's a lot of experimentation around threshold Forum about making better decisions it's not necessarily faster but we're finding out something um so this is why Dallas map up

[Music] um I believe that Charles a digital native organization to do digital tokens Digital Services paid digital payments and it is fundamentally a different way of work that we are experimenting with it's new it's under five years old with trying to Speed Run companies and this is just the beginning it's the Prototype Proto Proto digital version of a joint stock company borderless transacted the non-get currency entirely online decision making radical transparency jurisdictions and I think that jurisdictions with the most dials will

actually stand now the issue is that most dials don't have a legal structure and this is a problem [Music] um I want to bring you guys to a U.S case study called This is fairly new it was 12 22nd September but essentially the cftc this is the commission on federal training commodities fall suit against cookie it's unincorporated association so as long as you exercise the governance token on rookie to vote you are a member of an unincorporated association and you're joined in severally liable for all the debts alignment Association so all token holders are liable for anything that

they took under including anything that they did wrong so including so you have to make full restitution every customer investor whose funds will received or utilized in violation on the cftc order now this is not fun because many of us have uniform tokens many of us have governance tokens and it's created a chilling effect if you are an unincorporated association there are ways to stay safe but there are a lot of dials with very very similar fact situations for example make a dial so she saw pancakes for make us this is just the start of litigation because if the cftc enforces successfully against Ruby all of these other companies will have to follow the line or will face the same liability so

if you are considering a doll don't do it unless you're in the legal structure now there are legal structures that you can do to avoid cooking down if you are structuring a token project um don't work with Americans structure to avoid U.S entities U.S persons any stage so you don't have sec or cftc exposure um if you're doing anything with CK after tornado cash cryptography consider going down consider going pseudo anonymous find a good lawyer who's crypto native a crypto native lawyer will understand it when you tell them ask them what a consensus mechanism is and they'll be

like yes consensus mechanisms are important and they use this they shouldn't give you a blank statement um and they have four successful jobs that aren't at risk of education and a non-us lawyer non but lawyers tend to structure for the us and that creates liability um so a good lawyer will create room for experimentation on the token but still allow that so for example Els style has a two layer company structure they have a cayman's island Foundation structure that sits at the top level that issues tokens and then they have another services company that on their behalf holds property bank accounts assets can

pay deals can pay people for work done and Fiat can't enter the contracts it is a legal issue so for example recently when Go Daddy took away I think East link the Singapore company that is owned by ens style could sue GoDaddy for that he was appropriate person but if you're unincorporated Dow unincorporated association it is very hard to sue because you don't know who's in charge so legal structures you should set a jurisdiction um set a legal structure set governance which is what happens if you can't agree when you guys all range quick when how do you guys make decisions is it a board

of directors do you delegate all these basic things that you can make and then you have clean structures that I previously talked about a two-layer structure one that's offshore that can issue tokens and then an international structure now you generally have an offshore structure because of tax issues most of the international jurisdictions don't tax people for sales of tokens for example if you do sell on show in Japan there's a 17 tax if you sell you also offshore entity to sell there generally is low tax and then you should have an operational company in a neutral jurisdiction Singapore is considered neutral jurisdiction a lot of companies do a lot

of crypto companies do use Singapore Dubai is also up and coming uh Gibraltar theoretically is also possible but you should choose somewhere where the service providers are reasonable and the risk of litigation and the laws are clear so um I have been talking about how Dows need a legal structure this is me on Twitter I will speed on you through if you want to follow me on Twitter this is my Twitter handle but essentially the equivalent of getting a good legal jurisdiction for your down or for your legal structures is essentially it's like hardening a kernel you you get exactly what you need to do the thing

you need so you should be legally compliant and legal engineering so this is the entire thread of it so the next question is how should I structure my project so these are the questions you need to ask yourself if you're structuring a project thinking of a project or investing in a project which is what are you really building are you building like those earlier categories of Dao are you building a charity are you building infrastructure are you building like just a smart contract consultancy for people they're taking fees yeah well you're raising money from PCS will Ico tokens if you're raising from disease most of the Southeast Asian

structures will good unfortunately like we grabbed a lot of the companies eventually end up having a Singapore top level VCS have more confidence putting into Singapore structure because it's quite easy to settle with disputes most of the big disease Sequoia they have regional coverage but all of the HQ are in Singapore if you are doing Ico tokens think of another structure outside of Singapore because of tax issues and then where is your Revenue model from where from where's the profitable because that will also determine where you should put the companies so for example there are subsidiary companies in each country and then who you are working with where do

people live and work are they all in Vietnam are they distributed any more operating because if you have people working in Vietnam and they're taking fear and you're going to need a Vietnamese company at some stage to pay people through bank accounts to payments unless they are willing to take usdc or other aspects or other payments [Music] so the the answer is it depends what legal structure should you use it all depends on your business so choose a country with good Taxation and dispute resolution allows you to have a bank account Sue and be sued it's easy for investors to understand and put money into and crypto and web tool it sometimes involves two companies in different countries

[Music] questions do we have time for questions [Music] anybody have any questions okay [Music] you know with a recent uh clamping down of mes with Singapore still the best place well as long as you're not a scam it's generally fine and it all it also depends on what your project is doing are you a Co-operative for artists and you're just helping artists buy and sell their art I think it should not be a problem Mas also has an open door policy we rent rejection Singapore ruin and

confident they don't have hard rules but but they do make an effort to talk through all the projects about where they should be here so operational company in Singapore is still recommended you just make sure it has no crypto links you're just a software Services Company any other questions uh [Music] foreign please feel free to give us a comments

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