One of the key reasons why people opt for DAO company registration in Estonia is that there’s a higher level of legal protection. If a business/person simply creates a DAO with no company formation to back it up, there’s no legal protection for backers, stockholders, and other people involved. Naturally, singling out liable parties in bigger DAOs might prove to be difficult, but it’s still a good choice.
While dealing with something as novel as DAOs and, by extension, the blockchain technology itself, it would be exceedingly risky not to create a company in order to offer some form of protection. There are several risks to take into account when dealing with a DAO and forming a business entity can alleviate or reduce some of these concerns.
How Long Will It Take to Register a DAO Company?
Creating a DAO business is a speedy process. Estonia has a very lax bureaucratic system that tends to favor quick processing. In fact, it’s not uncommon for small businesses to go through the “lengthy” process of registering their entity within a couple of weeks, with documents being approved in less than ten business days. There are several intricacies to consider while registering a DAO business in Estonia, so it’s highly advisable to consult a qualified business register advisor. Using outside help can save a considerable amount of time and help avoid possible mistakes that could spell potential trouble later on down the line. It’s also pivotal to note that forming a DAO company requires additional steps (when compared to usual company formation in Estonia). They mostly have to do with the DAO’s code.
How to Open a Bank Account in Estonia for DAO Company?
Opening a bank account in Estonia is also very easy. As mentioned previously, Estonia is already regarded as one of the easiest countries in the world to do business in. It has a big enough pool of local financial institutions that all of the major banks are represented. Typically, opening a bank account is a fairly simple process that takes a few days. Most companies have relationships with local banks to speed up the process. Most big, popular, and/or established banks do not require a face-to-face meeting with the founding members of a DAO company. The banks in Estonia will grant approval based on their internal procedures, so it’s best to consult with someone who’s familiar with the procedures of a bank that’s best for your needs.
How Did Estonia Become a Hub for Entrepreneurs?
Estonia is known as an excellent country for entrepreneurs and startups. Estonia’s well-developed educational system and the right mix of entrepreneurial spirit and governmental cooperation are the main reasons for its tremendous success. Entrepreneurship and new technology are a way of life in the country. Especially in the last couple of years, there’s been a surge in startups and business projects related to cryptocurrencies, blockchain, DAOs, NFTs, and so forth. Estonia boasts a large and active startup ecosystem – the jurisdiction is very welcoming to both local and international startups. The e-Residency program, a government-backed program that provides foreign entrepreneurs with a digital identity. It has been a key driver of the country’s startup ecosystem and Estonia is always interested in boosting the activity of its tech sector.
What Organizational / Legal Things to Consider Before Even Starting a Company?
Before you even open a bank account, you need to think about a few aspects of corporate formation, including:
- As a structure, partnership in business hardly ever works well. It’s difficult to get all partners on the same page, it’s hard to receive approval from each individual involved. DAOs can potentially experience the same difficulties.
- Not all parties involved in a DAO are objectively qualified to make the best business decision.
- An algorithm-based organization might be more mistake-prone in general.
- A DAO’s code has to be completely bug-free right from the start which requires a very thorough testing phase.
- Legal structure for DAO businesses is in its infancy and it needs a lot of research to find a good solution.
Why is It So Easy to Launch a DAO Company in Estonia?
Like we’ve mentioned before, Estonia has been a hotspot for blockchain innovation for several years. The country has been ranked highly in several official reports for being a great place for blockchain startups to develop in. When considering the research that the country puts into the development of blockchain technology, it’s not surprising that Estonia would have one of the most supportive regulatory frameworks in the world.
Why Do People Choose Estonia for Starting a DAO Company?
The biggest advantages of starting a decentralized autonomous organization in Estonia include, but are not limited to:
- Higher levels of inclusivity and responsiveness for stockholders. Every stockholder has an equal say in the operation of the company.
- Little to no room for human error.
- All the legal advantages of a regular LLC (including legal protection).
- Greater transparency and security.
