Is it possible to create a company with cryptocurrencies?
The emergence of cryptocurrencies, such as Bitcoin or Ethereum, and their increasingly clear expansion, raises many questions regarding their use for acts that previously employed ordinary money. In this article, I would like to share the doubt of a client about creating a company in bitcoins or in any other type of cryptocurrencies, continuing with the theme of our previous post:
Setting up a company with cryptocurrencies
Contributions in the incorporation of capital companies.
Capital companies, such as limited companies and public limited companies, require an asset base to be established and to be able to carry out their activity. This initial asset base will be constituted by the set of assets and rights susceptible to economic valuation, as stated in article 58 of the Capital Companies Act.
In the case of contributing money, which is usual, it must be done in euros or the equivalent in euros if foreign currencies are to be contributed (article 61). Movable or immovable property can also be contributed, which must be identified and valued in euros, as derived from article 63.
Would the contribution of cryptocurrencies to a company be monetary or non-monetary?
Understanding the contribution of cryptocurrencies to a company as monetary or non-monetary will depend on their legal nature. As we mentioned in a previous post, to date, cryptocurrencies cannot be considered as money, as they are not backed or recognised by the majority of states, including Spain, but rather as a digital movable asset which, having a recognisable economic value, forms part of a person's assets, so there is nothing to prevent them from being used as a contribution in the incorporation of a company through the contribution of cryptocurrencies, although certain issues need to be clarified in this regard.
Consequently, the contribution cannot be understood as monetary, but as a non-monetary contribution, and must comply with the legal requirements established for its identification and valuation, like any other non-monetary contribution.
What are the legal requirements for contributing cryptocurrencies to the creation of a company?
Fundamentally, the contribution of cryptocurrencies to a company must meet these requirements:
- Identification. The cryptocurrency must be identified and a complete description of it must be made. In the case of Bitcoins, an electronic address and a public key to which they are linked will be necessary.
- Valuation. Every contribution must be susceptible to valuation in euros, as indicated in article 63 of the Capital Companies Act. The value that such contribution has at a given moment must be accredited, for example, on the day the deed is granted.
- Accredit ownership and the contribution. The prior ownership of the contributed cryptocurrencies and the effective delivery to the company must be proven, which can be accredited by various systems, among others with the input and output hashes and the digital signature.
- Public limited companies. If the company being constituted is a public limited company, a report prepared by an independent expert will be necessary, in accordance with article 67 of the Capital Companies Act, which must be incorporated into the deed.
These would be the only special features when constituting a company with cryptocurrencies (and similarly for increasing its capital). Regarding the numbering and attribution of social shares, shares, liability of the partners, etc., it would be similar to a company with ordinary contributions.
If you have any questions about company formation and the possible contribution of cryptocurrencies to the company’s capital, do not hesitate to contact us. From our notary office in Barcelona, we will be happy to assist you. You can write to bcn@jlanotarios.com or write to us through the contact form.
