World’s first company founded with Ethereum as initial contribution

August 24, 2020 Editor Ethereum 0

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  • Amazing Blocks is the world’s first company founded in Liechtenstein with an initial contribution made entirely in Ethereum (ETH).
  • Amazing Blocks made a founding contribution of 261 ETH to be registered in Liechtenstein.

In a press release, Amazing Blocks announced that it was founded on August 13th  with a contribution made solely in Ethereum (ETH). Registered in Liechtenstein, this European country is also the first to allow the creation of companies without a bank account, but with the use of cryptocurrencies such as Ethereum, Bitcoin, Litecoin.

According to the statement, Amazing Blocks offers a service which they call “digital legal entities as a service”. In other words, the company uses a software to tokenize the shares for legal entities in Liechtenstein leveraging the new Token Act (TVTG) which came into force in January 2020. 

Advantages of using Ethereum and Bitcoin to found a company

As the press release states, founding a company in Liechtenstein requires an initial contribution of 50,000 Swiss Francs (CHF) or USD 54,000 in cash for a stock corporation (Aktiengesellschaft, AG). Also, founding a company in Liechtenstein requires expert advice, completion of a series of documents and other requirements that have to pass through a bank. The new mechanism that allows the use of cryptocurrencies is much simpler and cheaper, as stated by Amazing Block’s CEO Sofia Balogianni:

The process of founding a company should not depend on single entities such as a bank. When founding a startup, it is all about saving time and money, something we want to deliver by being first movers in using crypto assets as an initial non-cash contribution.

Amazing Blocks deposited 261 ETH on August 7, 2020, as part of the initial contribution. The company then needed a non-cash contribution agreement to effect registration in Vaduz, Liechtenstein. However, the agreement was subject to changes in ETH price and could have been rejected if the deposit fell below the aforementioned minimum amount. As Amazing Blocks states, this question always arises. In this regard, however, it was very helpful that the Swiss tax office publishes daily prices of crypto assets that can be relied upon.

Amazing Blocks claims that the process has the important advantage of being transparent, with no intermediaries, but still following the legal requirements. In its experience, the company said that bank accounts in Liechtenstein may be unnecessary in the future. In addition, Amazing Blocks added the following in its press release:

(…) in the near future issuing shares and the respective distribution of voting rights can now be fully automated and standardized through an Ethereum based layer benefitting from smart contracts. Of course, security and legal concerns may arise on whether or not this model is to be trusted, but they can all be jettisoned by the unique technological structure of blockchain. Ultimately, this will lead to much higher flexibility for entrepreneurs and investors.

Another prediction of Amazing Blocks is that Liechtenstein will receive an increase in innovation from entrepreneurs and investors who will use the mechanism to open new businesses. In addition, there could be an increase in the flow of capital from “forward-looking investors”. In this sense, Amazing Blocks and these types of “futuristic investors” are helping to transform the financial world of today.