Web3 (or Web 3.0) is the future of technology and will shape how business, consumers and peers interact. The vision for this new, blockchain-based version of the web includes cryptocurrencies, decentralized finance (DeFi), non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), and many more fascinating technologies. The appeal of Web3 is that it is decentralized, which means that instead of us accessing the internet via services mediated by companies such as Google, Apple, or Facebook, we have complete control and administer areas of the internet.
Compared to those early days of Web 1.0, we are at a very similar stage in understanding what we can potentially do with Web3. For some years now, Web3 has remained a grand theoretical vision for engineers and cryptographers. However, the movement for a blockchain-powered future has come to dominate some tech conferences and social media discourse in recent months. It has even compelled large IT firms to build Web3 teams.
This has made the advancement of Web3 rather ironic. Enthusiasts hope that Web3 will ensure that sharing photos, communicating with friends, and purchasing things online will no longer be managed by big tech companies but via several small competing services on the blockchain. For example, every time you post a message, you earn a token for your contribution, giving you both an ownership stake in the platform and a way to cash in one day.
In principle, this also entails avoiding fees, regulations, and restrictions imposed by IT corporations. Nonetheless, big digital platforms are getting in on the act. Mind you, the Web3 wave extends well beyond building products around web development, cryptocurrencies, NFTs, or DAOs. It's already being used in various fields as shown below. For example, if you want to knowhow much groceries you have left back home while you're at work, you may ask your digital assistant to analyze the contents of your fridge by connecting with the linked smart gadgets in your home.
Furthermore, you may use your omnipresent internet-connected gadgets at home to coordinate your holiday plans, business travel, housekeeping duties, and even secure your home security. The tailored suggestions of the virtual assistant will guide you in planning the ideal weekend, from ordering discounted tickets to discovering fascinating new locations to reserving lodgings.
The options are endless, especially as we leap into the future. But entrepreneurs and founders of Web3 businesses still face fundamental challenges as to what is the best way to build these amazingly innovative businesses. In this article, we will walk through some of the several considerations that Web3 founders must take into account when decided where to incorporate their business.
The world is shifting toward remote work. Freelancing and remote occupations account for a significant portion of the U.S. workforce. It's intriguing to see where we're going since most of people prefer working from home over working in an office, especially if you've got kids to look after. Whatever the reasons, the centralized remote employment platforms are inadequate.
Decentralized remote job/freelance networks quickly solve these issues. Examples include Ethlance, Atlas.Work, CryptoTask, Blocklancer,and others.
Ethlance, for example, is a remote job platform that runs onWeb3. The decentralized program operates on top of the Ethereum blockchain, allowing anybody to recruit and begin working in return for Ether money, which was not feasible before.
Decentralized remote work platforms either wave fees or keep them to a minimum. There is no centralized authority; therefore, anyone is free to join. And, of course, you get to receive payment in cryptocurrency.
As we leap into the future, Web3 seeks to diversify the internet to minimize hackers and dependency on centralized repositories. We will own our data, thanks to verified data scarcity and tokenized digital assets.
Web3 will become indispensable in the future, as most users seek customized and unique web surfing experiences. It will aid in the decentralization of enterprises, removing intermediaries, and directly transferring value to consumers and suppliers in a network. Network users will collaborate to solve previously intractable challenges via common ownership and governance of these new decentralized intelligence structures
With teams that reach from Singapore to Dubai, many times founders are confused about the best place to set up their business. A good rule of thumb is to consider the team composition, where the full-time and most active founders reside, and examine the regulatory environment in those jurisdictions. If most of the founding and core team resides in a country where the laws and regulations on digital assets are transparent, clear, and favorable, that brings a strong case for setting up shop in that country.
Some jurisdictions such as Dubai in the United Arab Emirates are making a concerted effort to create clear and transparent regulations around digital assets. In May of 2022, Dubai announced the creation of the Virtual Assets Regulatory Authority (VARA). VARA is tasked with organizing the issuance and trading of all virtual assets and tokens in the emirate of Dubai. This includes creating standards for the protection of beneficiaries’ data and preventing fraud and manipulation of virtual assets. Under VARA, certain activities and services related to the offering, trading or managing virtual assets will require a license from the agency.
While the above framework may seem like a lot to consider, for many companies as longas clear guidance is in place, it is a preferable to lack of guidance or nearly impossible requirements. It’s much better for teams to consider jurisdictions that have a plan to create regulatory framework for digital assets or have started to create digital assets.
ManyWeb3 business are sensitive to tax obligations. In countries like Japan, many crypto businesses have left in orderto avoid hefty taxes that stifle their growth. While setting up a business that may have founders, contractors, and operations in different countries, Web3 businesses should think carefully about whether their activities or presence triggers tax obligations. While lawyers may help understand business structure and regulatory compliance, it is best to engage a tax professional or a lawyer that specializes in tax to be able to set up a business structure that minimizes tax liability.
In addition to questions about exactly where to incorporate a Web3 business, many founders have questions on the relationship between legal entities that exist in different countries. Some founders may opt to incorporate their main entity in one country but have other physical operations in anther country. Whether to have one entity act as a parent entity of another depends on a host of considerations from management, day-to-day control, relationship between the parties and also thoughts about indemnification. On top of these basic corporate law considerations, Web3 technology adds complexity via the nature of its transient business models.
All in all, the ideation and planning of a Web3 business requires consideration about hiring talent, taxes, regulation compliance, and corporate structure. ByteBao provides expertise to help you understand best practices in the industry while minimizing risks and maximizing opportunities. Reach out today for a consultation.
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