Liechtenstein allows the formation of a company without a bank account, using only cryptocurrency. Amazing Blocks was the first Liechtenstein-based business to make it happen. How does it work, and does it matter?

Amazing Blocks became the first company founded in Liechtenstein with Ether (ETH) as an initial contribution. The company was founded on August 13th; it doesn’t have a bank account and only uses cryptocurrencies. According to the press release, Amazing Blocks offers a service that they call “digital legal entities as a service” – that means they tokenize the shares of legal entities in Liechtenstein.

Founding a company with Ether

Founding a public company (AG) in Liechtenstein requires an initial contribution of 50,000 CHF or 54,000 USD. It also comes at an upfront cost as companies usually need to hire lawyers to put together the documents, and they need a business at a bank.

Amazing Blocks believes if businesses can bypass all of that and instead use cryptocurrencies, the process will become simpler. CEO Sofia Balogianni says, “The process of founding a company should not depend on single entities such as a bank. When founding a startup, it is all about saving time and money, something we want to deliver by being first movers in using crypto assets as an initial non-cash contribution.”

On August 7th, Amazing Blocks deposited 261 ETH as part of its initial contribution. The legal basis was provided by a non-cash contribution agreement to effect registration in Liechtenstein. As cryptocurrencies like ETH are subject to high price fluctuations, the agreement could have been rejected if the deposit sank below the required minimum amount.

Is this the beginning of a new era or a nice PR stunt for Liechtenstein?

The idea is to cut out intermediaries, such as banks or lawyers, as the process is transparent and still follows the legal requirements. As a result, bank accounts might become unnecessary in the future.

According to the press release, “[…] in the near future issuing shares and the respective distribution of voting rights can now be fully automated and standardized through an Ethereum based layer benefitting from smart contracts. Of course, security and legal concerns may arise on whether or not this model is to be trusted, but they can all be jettisoned by the unique technological structure of blockchain. Ultimately, this will lead to much higher flexibility for entrepreneurs and investors.”

If we believe cryptocurrencies are the future of money, then it makes sense to enable businesses to form companies with only crypto. But is it feasible today to run a business only with crypto? Probably not, because you still need a bank account to do business with pretty much everybody.

It does make the formation process easier though because you can work around a bank. It cuts down the cost and the time for forming a business. Once founded, businesses can then choose to open a bank account in any jurisdiction that works for them.

Thus, to conclude: This is probably not a huge breakthrough for crypto, but it’s a step forward – and it’s good marketing for Liechtenstein that it happened here first.

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