Sometimes you read a paragraph that is so perfect you have to sit back, kiss your fingertips and just give it up to the comic justice of the universe.
One of the top lawyers in the booming cryptocurrency industry says the legal structure he helped set up to raise funds for new virtual currencies is “old, inflexible and stupid” and may no longer be fit for purpose.
Well, who would understand the vagaries of an inflexibly obtuse legal structure for a financial product better than a guy who helped create that very system and lives in actual Switzerland?
Luka Mueller’s MME law firm helped set up foundations in Switzerland for Tezos and some of the world’s biggest ICOs, including those of Bancor and Ethereum. Many foundations applied for non-profit tax status. The money raised in the ICO is treated as a donation that may not be returned.
Regulators in the United States, the UK, and elsewhere are looking at whether an ICO should have similar investor protection to an initial public offering (IPO) for a company.
Oh man, you guys, he's not seeing it.
Mueller told Reuters cryptocurrency groups involving U.S. participants or gaining backing from investors should set up companies instead of the Swiss foundations he helped popularize.
“If you structure your token sale in a way that it would look like an initial public offering, then even if you launch a (blockchain) protocol, the foundation is maybe not suitable,” he said.
“If...the background is more an investor environment rather than a technical environment, yes, do all the registrations. If you want to sell it, if you want to be active and actively promoting it in the US, apply U.S. law.”
The crypto market is so troublingly unregulated that even the Swiss are saying "Someone should watch where the money is going" out loud.
“The Swiss foundation actually is a very old, inflexible, stupid model,” he said. “The foundation is not designed for operations”...
“You as a user must be absolutely clear — and if you don’t understand it keep your fingers away — that if you have an ether or a bitcoin, and it does not work, you have nobody to claim against,” he said.
We're now days away from The Caymans announcing that it will outlaw cryptos for being "Sketchy af."