Dear Community:
I have seen many creative and useful business ventures related to crypto-currencies. I continue to be impressed at how innovative the software engineers, developers, business persons and marketers are.
In any crypto currency related business there are many issues to consider upon start up. I would like to list some important ones and seek input from others as well.
1. You may want to create a business entity such as an LLC or a Corporation, but don't assume that you need to do this. It depends upon the nature of the business you are conducting. For example if you are a trader of crypto and you do it only for yourself, it might not even be a good idea to create a business entity as it would draw attention from regulators, banks and taxation officials, among others. What you are doing is generally perfectly legal, and there is no need to draw attention to yourself. Just make your money and pay your taxes. However if you are opening a major operation, be it a trading platform, large mining farm, an investment service, a new coin, or other large enterprise, then you would be better off forming a business entity for credibility, asset protection, and taxation issues. The choice of States should be considered as well. I prefer Nevada for the clients I represent so that I may be the front line for any issues that arise.
2. I always advise that any partners be trusted, known, skilled persons. The fewer partners the better. This is not always practical depending on the size of the venture. Consider making others independent contractors rather than partners, with a set percentage that has a cap. You may also offer a hybrid deal, payment of value up front plus a percentage.
3. Have an attorney draft any contracts or terms of service. Work with the attorney to make sure that they reflect what you want.
4. Consult with an attorney regarding laws related to what you are going to be doing. It is possible to get the licenses and approvals you need on your own without the help of an attorney, but at least get input on the process as you go along.
5. If you are purchasing equipment do not be hasty. Study the supplier, look for reviews, and take delivery of larger orders in stages.
6. Many people are looking to mine lately which is fine, however it has been my personal and observed experience that mining is not as simple as it may appear. In addition you run risks of the crypto-currencies that you are mining dropping in value, hacking, companies going out of business, miners overheating, miners simply breaking down or arriving defective, power rates rising, and so on and so forth. Try to talk to those who have gone before you before you leap.
7. If you are trading coins, study the coins, go to the opening page, look at the last few pages of the thread, follow it for awhile, ask yourself if it does anything useful or better.
8. Owning a business that deals in fiat such as most ATM's or an exchange will likely require that you register with FinCEN and set up an AML compliance program. This is not as hard as it sounds but it is important. In general, under these circumstances, the higher the dollar amount, the more information you will be required to obtain from the customer.
9. Be patient with yourself and others in the process. Things of quality and value take time and effort.
George D. Greenberg, Esq.
www.attorneybitcoin.com
