How to Legally Conduct Your Bitcoin Investment In Ukraine

14.03.2016

We hear about Bitcoin investment every now and then. The theme is burning for both global investment funds (Nasdaq, American Express, Goldman Sachs) and regular entrepreneurs. Following the successful crowdfunding campaign of Bitcoin exchange KUNA in Ukraine, which was financed solely in bitcoins, the actuality of this kind of investment has only increased. On the borderline of stock, corporate laws and economic value of cryptocurrency, let’s consider this unconventional model of attracting Bitcoin investment.

Revisiting the idea of contributing Bitcoin in an enterprise’s charter capital, one should remember the practice is existent in Italy while Bitcoin is considered a commodity in Australia and the US.

First of all, we have to determine the advertising campaign for the project seeking the investment. Having gathered the investors interested in the project (say, a hundred people), we will have to hold a meeting of founding investors to make a decision on private placement of shares.

Let’s get back to Ukrainian reality. In Ukraine, the law on joint stock companies allows using non-material assets with monetary value to pay for placed shares. On the assumption of a single share’s worth of $4 (~100 UAH), it will cost 0.01 BTC at current exchange rate.

A minimum charter capital of a joint stock company in Ukraine shall comprise at least 1,250 minimum legal wages, which is around $66,000 now (1.7 million Ukrainian hryvnias), so we will need to register 17 thousand shares at the National Commission for Securities and Stock Market. Eventually, the charter capital comprises 170 BTC. As our assessor is experienced in assessing digital assets, we may run private placement of the shares.

Then the investors will have to contribute the required amount in BTC to redeem the desired amount of shares. Afterwards, we will have to submit a report on placement of shares, approve the charter, and register the company.
Thus, and investor contributing 1 BTC to ‘pay’ for the shares will have a hundred shares to confirm his or her title for the 1 BTC contributed to the company’s charter capital. A rather peculiar form of title perfection for cryptocurrency, isn’t it?

Then we may consider running an IPO, attracting foreign investors and scaling of the company. As we have made our calculations on the basis of a current exchange rate, which tends to rise, the share price fluctuations may facilitate using derivatives in securities trade.

Having accumulated 170 BTC in the charter capital, one may consider launching a cryptocurrency exchange, investment in startups or running a ‘crypto-banking’ business accepting deposits and originating loans in Bitcoin. Revenue will be subject to distribution as dividends to the shareholders.

While we discuss those fantastic ideas in the Russian-speaking segment of the community, the developed infrastructure of trading and common law make it practicable in the West bringing investors significant revenues.

Nestor Dubnevych,
Lawyer at BITLEX

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Tags: Bitcoin, investments, Ukraine