As corporate lawyers with extensive experience in digital law we analyse the feasibility of setting up a new company using this type of virtual currency as share capital.
What is a cryptocurrency?
A cryptocurrency is a virtual currency used to exchange goods and services through a system of electronic transactions based on blockchain technology without intermediaries. Bitcoin is the most widely known cryptocurrency, but there are many others such as Ethereum, Litecoin or NEM. If you compare e-money and standard money, you may realise the advantages of cryptocurrencies.
Decentralisation: they are not controlled by any State.
Anonymous: your privacy is preserved when you make transactions.
International: they can be used in any country of the world.
Without intermediaries: transactions are made directly from person to person.
Are cryptocurrencies real money?
In recent years the concept of e-money is building up. However, a series of doubts arise regarding its legality. From the legal point of view cryptocurrencies may not be considered legal currency. Cryptocurrencies are deemed assets, since they are intangible property worth a certain amount of money.
Are Bitcoins deemed money when setting up a company?
At first, considering that bitcoins or other cryptocurrencies are not deemed legal currencies, and that in order to set up a company a full outlay of the company´s share capital amounting not less than EUR 3,000 is required for a limited company (S.L.) in Spain, all would show every sign of being unfeasible.
On the other hand, given that the Spanish Company Act (article 63) allows to provide assets as non-monetary contributions (replacing monetary contributions) for a company´s share capital, provided they are subject to economic valuation and that its value be not less than EUR 3,000. Therefore, the possibility of cryptocurrencies as part of a company´s share capital as non-monetary contribution is introduced.
Steps to set up a company using cryptocurrencies as share capital
In order to set up a company using cryptocurrencies as the company’s share capital, it is preferable to seek expert advice from commercial lawyers and the services of a notary public familiar with digital law. Steps to follow:
Valuation of cryptocurrencies. A notary public should verify that the value of the company´s share capital is actually not less than the minimum amount required to set up a company (EUR 3,000 for limited companies in Spain) in order that cryptocurrencies are considered non-monetary contributions and have legal validity.
The notary public must review the value of crytocurrencies in portals such as Blockchain.info.
Transfer of coins ownership: holders must prove before the notary public that they are the true owners of these contributions and transfer the ownership to the new company.
Company setting up: once the company has been incorporated, it must follow the same steps established for companies with monetary contributions.