The crypto space – an update
Partner Zoe Wyatt provides an overview of the work she is currently doing in the crypto space.
The pace of change in the tech sector never ceases to amaze, particularly in the crypto world. In this brief article I want to summarise the work I am currently doing in this space.
I mostly advise clients that are offshoring for regulatory purposes (e.g. ICOs, crypto exchanges, derivative exchanges, DeFi etc.). I advise on all the UK and cross-border aspects of the offshoring process, including:
- use of orphan structures such as Cayman foundations and Singapore guarantee companies to achieve decentralised legal ownership which is a key objective for the crypto community);
- use of interim offshore structures (e.g. an offshore subsidiary of a UK company) in order to issue SAFTs to raise initial funds and how to unwind the interim steps;
- structuring arrangements between offshore and UK including all relevant international tax considerations;
- how to leave a pool of tokens in the UK company (for incentivising future employees or for staking) without triggering a disposal or a deemed revenue stream;
- managing any timing mismatch on tokens coming into the UK company and out to employees / contractors;
- VAT considerations on electronically supplied services (this is a seriously non-compliant and misunderstood area);
- how to structure founder / shareholder / employee / contractor tokens tax efficiently;
- valuation of tokens / right to tokens (via the Andersen US valuations team);
- maintaining the efficacy of offshore structures (i.e. managing corporate residence and PE risk);
- impact of a DAO and community voting on corporate residence (I expand on this in an article that will be published shortly); and
- providing strategic and offshore structuring advice to founders in other high tax and highly regulated jurisdictions, giving directions and ideas to their local advisers to help navigate local anti-avoidance issues.
I am also delighted to be leading the tax working group for CryptoUK along with its chairman and will be an adviser to the new all party parliamentary group on crypto once it is properly established.