Regulation Tax and Government

What a catchy title, but surprisingly interesting.

Last night I attended an event organised by the Blockchain Association of Ireland at the Dublin offices of large law firm Arthur Cox. The discussion may interest the crypto community in general and in this post I will give an overview of the event and some thoughts on the Blockchain and Crypto Scene in Dublin.

Arthur Cox is one of Ireland's largest law firms… For over 90 years, we have been at the forefront of developments in the legal profession in Ireland.
Source: http://www.arthurcox.com/who-we-are/our-firm/

Money Talks ...

We are in the middle of a transition. Crypto has come a long way from it’s roots in the Cypherpunk movement and it’s no longer spoken about in hushed tones. Most people still don't really know what it is or how it works but, people are at long last are getting interested.

It’s easy to get frustrated with a slow pace of change in society, but people need time to process, to adjust. To borrow a theory from the fields of economics and psychology, people in general are risk averse. Risk averseness is a feature of human evolution to low frequency uncertain events. The idea is trust what you know, your survival probability is increased by being averse to change from known outcomes.

Bitcoin…

When you start talking about Bitcoin you quickly realise it has a dramatic capability to polarise people. I didn’t get it at first but when you go down the rabbit hole you quickly realise that this idea has the opportunity to take Economic Power away from existing Societal Power Structures. This is huge!
Maybe people don't realise this is why they their opinion is so polarised, maybe people get angry because they feel they are being cheated but undoubtedly this is a major contributor to their emotions. Game Changer!

What did Bitcoin really achieve?

There are lots of issues with Bitcoin and I am not sure if it will overcome them but the seed it has planted will live on for a long time I have no doubt.

Blockchain aka Distributed Ledger Technology

Corporations

Like it or loathe it, the world at the moment is run by corporations, organisations with economic power are the people that have the ear of our leaders. They fund elections, fund infrastructure, provide services and are accepted by the majority at the moment. Blockchain is a threat to the status quo but it is also a huge opportunity.

Future Possibilities

Scenario A

There is a scenario in the future where Blockchain Tech will render all existing Societal Structure mute, society may well organise itself around DAOs, pay for things with global decentralised cryptocurrencies but we are not there yet and if this is the future, there will undoubtedly be a period of transition.

Scenario B

An alternative scenario is where we take the best bits of the existing societal structures and combine them with the best bits of Scenario A.

Will this be better in the long run, who knows but we are already seeing this happening.
Yesterday Venezuela launches presale of state-backed ‘petro’ cryptocurrency. I am not sure this particular ICO will work out as intended but it’s likely only a matter of time before we see more governments issuing national (fiat) currencies on blockchains.

Regulation Tax and Government in Ireland

The event in Dublin last night was packed with people from all areas of the Blockchain Space in Ireland and there was some very engaging and thought provoking discussion on the implications of “Distributed Ledger Technology” in the areas of tax, regulation and corporate law.

On one level some of the issues being discussed missed the point of Scenario A described above and focused on Scenario B, but I was really impressed with the degree of practicality with which this technology was being addressed by the mainstream Industry in Ireland and even if the Scenario A plays out we will still have a period of transition which we will need to practically navigate.

Arthur Cox...

The talk was divided into three sections with a senior partner from Arthur Cox covering three key aspects of Cryptocurrencies. The discussion provided an insightful view on the current state of the legal and regulatory landscape in Ireland.

Legal Contracts

Pearse Ryan began the talk with a discussion on Smart Contracts. He gave an overview of some of the challenges they are facing in this area and mentioned several publications which they will be releasing in the coming weeks on this topic.
Of course in the purest sense a smart contract shouldn’t need to be legally enforceable but I think it’s unlikely we will get to an efficient functional model in one go. It will take time.

Corporate Structures

The second speaker at the event was Maura McLaughlin who discussed how ICO’s are structured and some of the challenges, the risks and opportunities in this area.

The ICO space has been very hot in the last year globally. People have been choosing Switzerland and Singapore but increasingly people are looking at alternatives. Companies have increasingly been choosing Ireland as a base for their company, I suspect in part for tax purposes. The scene really seems to be hotting up in Ireland and we will see some very large ICOs from Ireland in the coming year. Ireland has been linked to many large global manufacturing companies in the health sciences and supply chain management, text book cases for Distributed Ledger Technology.

The takeaway from this part of the talk was that if your thinking of launching an ICO get expert advice on how you structure it to avoid real risks that you as a director, owner will face.
To give some thought provoking examples;

• Are you issuing a payment currency, utility token or security?
  Different areas of the law and regulation will apply, e.g. Anti money laundering, Disclosure requirements, Registers of Contributors…
• Will you company be classified as a IPO type structure or will it be a Collective Investment Vehicle?
  Again different areas of the law and regulation will apply.
• Backing up any statements made in white papers
  What is the source of any assertions or promises made in white papers?
• Escrow agents for funds raised
  This relates to the money. Is a third party being used and is money being used for its intended purpose
• Are you disclosing enough in the white paper to avoid possible directors and officers proceedings.
  White papers have been getting longer and longer, more like prospectuses for IPOs, covering all the risks and limitations. In part to protect the owners of the company from litigation

Tax

The third speaker certainly got the most questions from the audience.
Caroline Devlin, a partner specialising in Tax discussed the practicalities and some of the areas where we need to be proactive in influencing policy with regard to the tax code.

How much tax do you need to pay in Ireland?

There were typical legal nuanced answers to many of the questions posed by the audience and the answer was anything from 0% to 55% depending on your circumstances. The clear message was every case is unique and it is important to get bespoke advice and be proactive.

Takeaways

In Ireland there are great opportunities in the Crypto/ICO/Blockchain space. The Irish regulator and government has not yet taken a clear policy direction on this but behind the scenes there is a lot of work going on with some well informed people. There is a huge scope here for engagement at this early stage to inform policy with proactive engagement.

Thank you for reading this. I write on Steemit about Blockchain, Cryptocurrency and Travel.
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