Re: Investment pooling
Posted: Wed Jul 20, 2022 8:47 pm
Hello,
So I have looked into this and here is my initial responses....
As I mentioned, and after further consideration, I continue to suggest making the investment side a subsidiary. As investments are potentially more risky, keeping the two entities separated would protect ProHashing's original business safe should anything go awry on the investment side. Just make sure you make it an Limited Liability company, so any potential lawsuits would not encumber the ProHashing assets.
By going with Wyoming, like I said, is a looking to be a crypto friendly state and they have already passed several crypto related bills while other states are still unsure what to do about it. Also, their money transmitter bond (for the money transmitter) starts at only $10,000.
If you really wanted to go cheap Montana does not require a money transmitter license. However, again, considering Wyoming is working to be crypto friendly, and I don't think $10,000 is excessive, I would personally recommend Wyoming over Montana for the long run.
It is true that if you are performing "currency dealer or exchanger" services then you would need one. This is why crypto exchanges require them, as they are providing a exchange service. In other words somebody comes to them with Ethereum and exchange it for Bitcoin.
However the investment model is not an exchange service. Investors would purchase the NFTs in Ethereum, and you would pay-out in Ethereum - there is no exchange taking place.
Where there would be an exchange is internally for business operations. Once you have taken in the Ethereum "to be invested", as part of your operations you exchange that to FLUX to master node. However you are not exchanging the Ethereum for the customers, you are exchanging it for your operations. Once you get returns (in FLUX) you again exchange it to Ethereum - not on behalf of your customers, but as your own operations in order to pay your NFT holders.
Hopefully I made this clear, but basically you are not becoming an exchange service where somebody buying and NFT is expecting a different currency in return.
In fact, you might even argue that this isn't a traditional service of any kind, since after the initial sale of the NFT the owner never pays you anything. If you own a bond or stock (with dividends) you don't consider that a "service" from the company, do you? In many ways what I am proposing is the same thing.
As the "investors" are just purchasing the initial NFT that is used to fund YOUR project, and expect a return on it, that is not a service. The NFT holder cannot "end" the project themselves, it is your project, not theirs. They can resell the NFT on the open market to somebody else, but that does not give them control over the project.
So in short - they are giving you money to launch *your* project, and expect to be paid from the profits of the project (in the same currency they paid you in). Your not exchanging money "for them", you are just paying them based on your own profits from your project. The process of running the project, doing any exchanges, equipment purchases/maintenance, etc. would all part of your operations.
Another way to think about it, if you were doing a FLUX noding project, is that you are not saying "Here is TechElucidation 0.5 Ethereum, and now I am converting his Ethereum to Flux, and now TechElucidation has 1539 FLUX". Instead you are saying "We (ProHashing's new comapny) need 1,539,000 FLUX to make nodes with. We can get that by converting (for ourselves) 500 Ethereum, which we can raise by selling 1,000 NFTs for 0.5 Ethereum each. Then from the profits we make on FLUX we will convert back to Ethereum, and from that we will pay each NFT holder 1/1,000th of the the profits (after administration costs and fees)."
So yeah, starting to ramble here.... but basically, in my opinion, you don't need a money transmitters license for this model to work.
Still recommend Wyoming however... lovely out there.
So I have looked into this and here is my initial responses....
As I mentioned, and after further consideration, I continue to suggest making the investment side a subsidiary. As investments are potentially more risky, keeping the two entities separated would protect ProHashing's original business safe should anything go awry on the investment side. Just make sure you make it an Limited Liability company, so any potential lawsuits would not encumber the ProHashing assets.
If you are registering a new company, then I would highly recommend looking at Wyoming who is trying to bill itself as the Crypto friendly state, or the "Delaware of digital assets". I assume you already know this, but just to clarify, tons of companies are "based in Delaware" because of their pro-business friendly environment - even if they have minimal operations there. Much like I was suggesting above setting up a subsidiary in another state - this is a very common business practice.Sarah Manter wrote: ↑Wed Jul 06, 2022 5:37 pm A money transmitter license (while it varies from state to state), in Pennsylvania where PROHASHING is based
By going with Wyoming, like I said, is a looking to be a crypto friendly state and they have already passed several crypto related bills while other states are still unsure what to do about it. Also, their money transmitter bond (for the money transmitter) starts at only $10,000.
If you really wanted to go cheap Montana does not require a money transmitter license. However, again, considering Wyoming is working to be crypto friendly, and I don't think $10,000 is excessive, I would personally recommend Wyoming over Montana for the long run.
Sarah Manter wrote: ↑Wed Jul 06, 2022 5:37 pm but we cannot exchange one coin for another type of coin, etc.
But here is another thing - do you actually really need a money transmitter license?Sarah Manter wrote: ↑Wed Jul 06, 2022 5:37 pm Are you aware of any staking pool structures that don't require us to put up a $2 mil bond for a transmitter license?
It is true that if you are performing "currency dealer or exchanger" services then you would need one. This is why crypto exchanges require them, as they are providing a exchange service. In other words somebody comes to them with Ethereum and exchange it for Bitcoin.
However the investment model is not an exchange service. Investors would purchase the NFTs in Ethereum, and you would pay-out in Ethereum - there is no exchange taking place.
Where there would be an exchange is internally for business operations. Once you have taken in the Ethereum "to be invested", as part of your operations you exchange that to FLUX to master node. However you are not exchanging the Ethereum for the customers, you are exchanging it for your operations. Once you get returns (in FLUX) you again exchange it to Ethereum - not on behalf of your customers, but as your own operations in order to pay your NFT holders.
Hopefully I made this clear, but basically you are not becoming an exchange service where somebody buying and NFT is expecting a different currency in return.
In fact, you might even argue that this isn't a traditional service of any kind, since after the initial sale of the NFT the owner never pays you anything. If you own a bond or stock (with dividends) you don't consider that a "service" from the company, do you? In many ways what I am proposing is the same thing.
As the "investors" are just purchasing the initial NFT that is used to fund YOUR project, and expect a return on it, that is not a service. The NFT holder cannot "end" the project themselves, it is your project, not theirs. They can resell the NFT on the open market to somebody else, but that does not give them control over the project.
So in short - they are giving you money to launch *your* project, and expect to be paid from the profits of the project (in the same currency they paid you in). Your not exchanging money "for them", you are just paying them based on your own profits from your project. The process of running the project, doing any exchanges, equipment purchases/maintenance, etc. would all part of your operations.
Another way to think about it, if you were doing a FLUX noding project, is that you are not saying "Here is TechElucidation 0.5 Ethereum, and now I am converting his Ethereum to Flux, and now TechElucidation has 1539 FLUX". Instead you are saying "We (ProHashing's new comapny) need 1,539,000 FLUX to make nodes with. We can get that by converting (for ourselves) 500 Ethereum, which we can raise by selling 1,000 NFTs for 0.5 Ethereum each. Then from the profits we make on FLUX we will convert back to Ethereum, and from that we will pay each NFT holder 1/1,000th of the the profits (after administration costs and fees)."
So yeah, starting to ramble here.... but basically, in my opinion, you don't need a money transmitters license for this model to work.
Still recommend Wyoming however... lovely out there.