Is cryptocurrency based company ownership tracking a idea worth pursuing?

Hi,

I want to hear your feedback on the feasibility of this idea and if you believe it’s worth anything. It’s nothing set in stone, no coin i’m advertising, I’m trying to see if you believe this would work with crypto nowadays and if you believe it’s worth looking into further:

I come from a lawtech background (Company in tech automating tasks that would oftentimes be reserved to legal profesions, usually on the border of what is considered to be a task for a lawyer vs a task that anybody can do given enough knowledge).

We started as a business registration company and one of the threads of ideas we’ve had internally is in regards to using tokens for governance and share representation in companies.

I know that there was quite a serious discussion regarding using crypto to tie to actual stocks on exchanges worldwide (NYSE, NASDAQ, Euronext, XSHG, etc), however it was faced with a lot of regulatory problems which ended up in making the projects often fail. Plus, most people weren’t as interested as expected in using crypto to pretty much own the right to a security that you’d be able to own directly and be safer.

This applies to stocks or other securities that are listed on stock exchanges and are both regulated as well as easier to access somehwere else.

One of the foundational benefits of Cryptocurrency is that it’s quite affordable now with the last couple of projects doing proof of timestamp and proof of stake, and they’re safer (from a technical perspective) than many off-chain solutions, plus they have redundancy built in.

What we were discussing (as we don’t see regulatory being an issue for us as we already have a background in that area, even if it takes time) was developing a Crowdfunding based system using cryptocurrency.

Number one, I personally see a huge potential in the small business investment space. There’s currently almost no offering outside institutions (VC Funds, Crowdfunders that oftentimes have very complex processes and require vetting, etc) which makes it hard to access funds, and if you are a reasonably competent business owner that can generate a ROI of 3-4x in the next 3 years (which is reasonable for smaller businesses and more niche models), there’s nobody to invest into you.

Now yes, the growdth potential of many of these businesses is smaller, but they’re millions, unlike startups that inherently are limited only to verticals with a lot of request (Uber for example replaced the gigantic taxi market, Airbnb gave an alternative to the institutional hotels market, etc). So as a person that has invested in the past I am sometimes pissed I can’t invest into smaller projects and try to differentiate over tens or hundreds of them to get over market average.

It’s less hands off than with traditional stock exchanges but it can also bring larger ROI and if you temper in the risk, I believe the models are even less risky than many startups that got listed on stock exchanges. If you know a chef is popular in his community and you see proof of that, along with great history, you can be quite sure that if he opens a local restaurant he can have quite a good chance of being popular and attracting clients. It’s a very simple business model that is also more stable in general. Plus the sums needed for success are smaller.

Now the concern with this is that many talented people lack money, and going back to point one, they don’t have any low-risk costs that can cover them. If I have a family with children, I’m not going to risk going in debt to a bank, but I would love getting invested in, but maybe I lack the capital to do it. So I’m going to give up a great business model, when a great alternative would’ve been finding a way to crowdfund it. And crypto is a good way to do it.

Number two, you can always remove the intermediary without major downsides (meaning that in the worst case scenario the crowdfunding site goes into bankruptcy, you won’t get to a situation where you don’t know who funded you or it’s hard for funders to get their money back), since the on-chain ledger can be respected by anybody, even outside the founding entity or the project developers.

So in short because I wrote a lot, what I propose is a form of stock management through crypto for small companies (valuation under 1M eur), targeted at small businesses. I’m going to need to write a few emails to national regulatory bodies but reading the law and previous court cases, there’s almost no regulation in Romania.

Ofc some things will require KYC/KYB, but this is already something people got used with when dealing with CEX, so I personally believe people wouldn’t mind if they would have to do KYC/KYB if they for example want to vote in the meeting of shareholders for various decisions. And they’d do it one time.

I know in the US, the SEC regulates the matter so I’m unable to opine there. What is certain is that a EU business can own a US one so that’s one way to make it work, plus regulations oftentimes fit on solutions, so if you have a good one regulators will adapt.

I see crypto as able to cut the costs veeery much, I won’t name coins but some have very little gas fees. The cost of dealing with this traditionally is larger than using a coin on the chain. Plus (depending on the chain) there is some great evidentiary data to help with both regulatory purposes and track changes in share owning.

Crypto is perfect for this in my opinion. What do you think though, do you believe this is something worth putting 100 hours into and ~1000 EUR researching?

Edit: To clarify, 1000 EUR + 100 hours is how much it’d take for me to pilot and test this, not to create a solution.