Welcome to the August 2020 issue of The Otonomist.
This month we have a guest author who’s been part of some of last decades’ “silent revolutions” in technology, commenting on our OtoCo product. We then look at Wyoming, the second jurisdiction where we just launched onchain LLCs. Finally, we populated an initial FAQ list prompted by early users of OtoCo’s onchain Delaware LLC assembler launched in late July.
With best wishes for the remainder of August!
– Han, Founder & CEO, Otonomos
PRODUCT UPDATE
The Road to Wyoming: Onchain Entities in the Blockchain State
A dotted map of the State of Wyoming, our next onchain jurisdiction.
Last month we launched our OtoCo onchain company assembler in Delaware and saw over 70 new LLCs born on blockchain within the first month.
We’re now bringing onchain company formation to the Blockchain State of Wyoming, where blockchains are recognized by law as the “ledger of truth” in companies and where a whole new crypto ecosystem, from digital asset banks to custodians, is rapidly developing.
With OtoCo, you can get an instant and FREE* limited liability wrapper for your project, irrespective of where you work from, making the Wyoming LLC the ideal vehicle to access the crypto economy (*until 1 September, users only pay ETH transaction fees).
> Get your Wyoming LLC for FREE today
UNBOUNDED THINKING by guest author Brenden Maher
OtoCo and The Revolution
The (digital) butterfly effect of silent technology revolutions.
In our first ever Otonomist guest author contribution, computer scientist Brenden Maher reflects on the butterfly effects of technology revolutions and argues that OtoCo is about a lot more than company formation.
His piece draws the arc from the early Computational Law initiative he was part of at MIT Media Labs, to recent experimentation with “pegging” of smart contracts, decentralized capital formation such as The LAO and Autonomous Organizations.
His broader point is that OtoCo is part of a continuum, stands on the shoulders of many, and may have ripples across unforeseen domains.
MEANWHILE, OVER AT OTONOMOS…
A Cambrian Explosion in Entity Formation
(Courtesy of Stripe).
One of our clients shared the above pictogram confirming significant growth in mainstream company formation as a result of COVID.
Otonomos is capturing part of this growth in the crypto and blockchain space, an industry Stripe Atlas broadly shies away from.
In a related article, Bloomberg reported that Americans rush to be their own bosses as COVID hits the job market.
If you too want to break free as an employee and join the crypto community, schedule a FREE 30 mins call with us to find out where is best to setup your entity around the world or simply order your company online and pay in crypto or fiat at otonomos.com.
FOUNDER’S NOTES
Frequently Asked Questions About the Onchain LLC
We trawled our OtoCo chat group for some initial FAQs about the workings and use of the onchain Delaware LLC we launched last month:
Can my LLC open a bank account?
Yes, two of our US banking partners, Keybank and Mercury have indicated they will open fiat accounts for your onchain LLC, subject to their inhouse onboarding policies. You will however need an Entity Identification Number (EIN) from the US Internal Revenue Service (IRS) before you apply.
Do I have to have an EIN for my onchain LLC?
This has proven a surprisingly difficult question to answer. The consensus seems to be that as long as your entity is not generating revenue from a US activity (i.e. you physically working from the U.S.), it can go without an EIN.
How private is my onchain LLC?
At formation, there is no filing with the State Registry and no public record of your ownership of the LLC. Your Operating Agreement is private too. Only if and when you link your wallet that holds the initial Membership with your real-world identity (e.g. when applying for a bank account) will the other party you deal with learn that you are the owner of the LLC.
Are my assets entirely separate from the Master LLC and the other Series?
Yes. We have made sure the wording of both the Master and the Series Operating Agreement is such that assets (and liabilities) in any Series are firewalled from the Master and from the other Series. Also, the OtoCo Master entities are not a Member in any Series. You can find the Operating Agreements in our documentation together with more legal detail.
What use cases have you seen so far?
- Some users just park a brand name or a trademark in their LLC.
- Some hold a single asset e.g. real estate or IP (or non-fungible tokens!).
- Some use it as an investment vehicle for their crypto to secure access to the U.S. infrastructure of exchanges and crypto-to-fiat off-ramps or payment solutions.
- Foreign Members use the LLC to book revenue from non-U.S. activities from e-commerce or from selling digital goods or services.
- Some want to turn their LLC into a Multi-Member LLC and eventually run it as a tokenized fund or use it for capital formation purposes. Both functionalities are on our roadmap.
What’s next?
By early September, LLC owners will be able to tokenize their Membership interest as ERC20 tokens with a ticker name of their choice. Our September sprint will then make token transfer easier so users can invite more Members. Later in the Fall, we will work on capital formation functionality so the LLC can be used to pool funds, together with advanced governance features.
Will this be free forever ;-) ?
When we set out developing OtoCo, we wanted company formation to be cheaper, faster and better. We believe users see the value in this and will be willing to pay the right price for instant onchain real-world entities. We want to continue to offer value in a freemium model once we make more features available. Till then, you can spin up your LLC entirely for free and only pay for the transaction fees on Ethereum!
> More FAQs are available on our Gitbook together with all legal document templates.
> Please join our Telegram group to chat and ask any questions you may have.
Next month: In your inbox mid-September, The Otonomist will publish its piece on the hidden centralization resulting from cross-shareholdings in America’s public companies, reveal a new DAO product and report on other developments at Otonomos.
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