The Worlds First SCIC in the Cryptosphere
ARK is now incorporated in France as a cooperative society (SCIC), ARK ECOSYSTEM, registered under n° 833 439 300, with a structure matching our open source blockchain organization. It is the first of its kind in the crypto world, and one of the first blockchain projects to incorporate in the European Union. We have been in close contact with the French financial governmental body and are keeping a very positive two way communication.
Lets start at the beginning…
From the very beginning, it has been the intent of ARK and the ARK Crew to create a legal business entity that would comply with the laws and regulations of the chosen country of incorporation. This process was initially slated for completion during the second quarter of 2017 as outlined in the ARK whitepaper.
At the conclusion of the ARK Token Exchange Campaign(TEC), the funding target of 2000 BTC had not been reached (with BTC at a much lower valuation in 2016). Our total project funding amounted to approximately $750,000 USD after the TEC.
Despite limited funding, the decision was made to proceed with the ARK Project. With the odds stacked against us, the mission was streamlined, with its focus directed towards software development of the ARK core and network. On March 21st 2017, the launch of the ARK network was a smashing success, and it has been running smoothly ever since.
From the start, we were determined to push the envelope in the blockchain space, even if it meant working day and night. With our vision for ARK, and the dynamic progress of ongoing work, we confirmed the need for a legal framework for the ARK project. Not only was it needed for ARK’s progress and future vision as a viable blockchain solution for the masses, but also for future partnerships. We also knew the creation of a respectable legal structure was dependent on a successful launch of the ARK network.
In search of the best legal framework…
The ARK Crew, under the leadership of François-Xavier Thoorens, Mike Doty, Lars Rensing, Scott McPherson, and Rok Černec, investigated many options for creating a legal entity, which were thoroughly discussed. We knew that the Swiss Foundation had become a very popular legal solution for the majority of existing blockchain projects, and at the time of investigation, this well established path to incorporation seemed like a viable solution. Other options, including many offshore corporations, were also examined. Advantages and disadvantages of each were reviewed, with offshore options being rejected due to concerns of legitimacy in the eyes of the world.
The Swiss Non-Profit Foundation was most favored, however the ARK Crew had the intuition that it was not the optimal solution. Indeed, it was not just a question of following the herd and copying other projects, but finding the right legal framework for the ARK Ecosystem vision.
During consultations with legal advisers, several objective concepts drove the ARK Crew to realize the Swiss Foundation may not be the best fit:
- The ARK token is not really compliant with the spirit of a non-profit organization. Regulators could potentially determine it as not compliant with the purpose of a Foundation.
- The Foundation would be financed from the sale of cryptocurrency, and to imply that cryptocurrencies are not financial assets increases the risk of non-compliance and misuse of the Foundation status.
- Moreover, the non-profit Foundation status does not necessarily apply to subsequent gains in market value related to cryptocurrencies.
It became apparent that another solution was needed. There would be many restrictions imposed during the creation of a Swiss Foundation — and the bottom line is — A blockchain technology project is NOT non-profit.
Choosing to investigate France…
Next, the ARK Crew analyzed other traditional forms of companies that would allow for:
- The governance of ARK, based on a Board of Directors and ARK community involvement. A main concern of the ARK crew is to avoid a fork of the main chain, and if a fork does occur, we want to have a large majority of the community in agreement.
- A well defined structure without legal ambiguities related to capital gains and taxation. There can be no future interpretations that may compromise the financial resources of the ARK Project.
After the initial investigation, François, as a French citizen, suggested focusing on the associative structures that exist in France. Following talks and investigation of this, we sought legal analysis from French Lawyer Arnaud Grunthaler, a partner at Fieldfisher Paris.
Fieldfisher is a European law firm with market leading practices in many of the world’s most dynamic sectors. They are an exciting, forward-thinking organization, with a particular focus on technology, finance, and financial services. They are a multinational law firm, with roughly 400 lawyers across offices in Amsterdam, Beijing, Birmingham, Brussels, Düsseldorf, Hamburg, London, Manchester, Milan, Munich, Paris, Rome, Shanghai, Turin, Venice, and Silicon Valley.
Arnaud is also a member of “France Stratégie”, the think tank of the French Prime Minister’s Cabinet, and contributes to the planning of the policies enacted by the public agencies. This policy institute performs research and advocacy, assisting the French government in determining the major directions of the nation’s future, along with the medium and long-term objectives of its economic, social, cultural, and environmental development. Within this think tank, Arnaud is working on finding legal means to make France attractive for blockchain development.
The SCIC — Société Coopérative d’Intérêt Collectif
In view of the legal solutions available in France, it appeared that a cooperative legal form of incorporation met almost all of our requirements: “Société Coopérative d’Intérêt Collectif” or SCIC for short, also known as the “Cooperative Society of Collective Interest”.
SCIC is the French acronym for “General Interest Co-operatives”. It is a new private, common interest co-operative which allows anyone — employees, users, volunteers, public bodies, companies, associations —to act together in a legal framework to govern an entity.
All SCIC members are shareholders and will belong to of one of the statutory categories : Founders, Advisers, or Employees.
The vote principle is : 1 shareholder = 1 vote.
The ARK crew, being initial share holders, will choose the Executive Board of the legal entity, which permits ARK to continue the current board structure.
Additional shareholders, except Founders and Employees, can be named by members of the Board. They can be appointed to the Supervisory Board, as provided for in the charter. The charter may be amended as often as necessary. In French Law, the SCIC format also allows public institutions to become shareholders if seen fit by the board.
As a common interest benefit company, an SCIC must keep at least 52.5% of the company’s profits as legal reserves. In the case of Ark, there is no plan to do any distribution of profits to shareholders, so it will hold 100% of any profits for use in development, marketing, and operations.
ARK chooses France and an SCIC
ARK has been envisioned as an ecosystem from its very beginning. The 26 founders, from over a dozen nationalities, believe in decentralized blockchain technology — working toward a global and inclusive community. It is only fitting that our legal entity aspire to these same visions. Inclusion of all involved is the ultimate objective: companies, users, token holders, delegates of the DPoS network, technical staff, academic advisers, employees, as well as public institutions.
The SCIC is a cooperative form of incorporation that addresses this objective. This type of legal entity offers the structural framework to achieve ARK’s innovative goals as an open source software project. The cooperative structure will naturally speed up development and adoption of the technology, and strengthen the value of the ARK Token.
This ecosystem will focus on blockchain applications from IoT to logistics, digital identity, and any use-case that would benefit from using blockchain technology. This will contribute to the development of the ARK project and the European blockchain industry.
This establishment of an SCIC in France is not only the first of its kind, but it will also bolster the credibility of cryptocurrency in France, the European Union, and the rest of the world.
The prospect of ARK and its SCIC formation has attracted the interest and enthusiasm of some regulatory institutions. During this process, ARK was invited by the Autorité des Marchés Financiers (AMF) —the French regulatory body for financial markets — and the Banque de France (National Bank of France) to present the ARK Project and explain the conditions of the ARK TEC. The discussion was in-depth and encouraging. Conversing with the AMF on how to best comply with French laws resulted in a positive two way conversation with the French government.
We are proud to play a part in France becoming a crypto-friendly environment, and proud to be the leaders in this huge step forward in cryptocurrency adoption.
With finalization of the SCIC, the ARK Ecosystem will now be able to expand and advance blockchain technology, providing opportunities for all. Welcome aboard the ARK, as we prepare the world for the future of decentralization.
- ARK is now incorporated in France as a cooperative society (SCIC), ARK ECOSYSTEM, registered under n° 833 439 300, a structure matching our open source blockchain organization. It is the first of its kind in the crypto world and one of the first blockchain projects to incorporate in the EU.
- As shareholders in the company, we can on-board any type of business entity — companies, experts, public agencies — to make strategic decisions for the future of ARK. The management structure is divided into “Employees”, “Founders”, and “Advisors”.
- This structure provides the benefits of being a non-profit as long as earnings are not redistributed to shareholders, covering the cryptocurrency funds held by ARK.
- We are advised by Fieldfisher law firm member Arnaud Grunthaler, who is a member of the French Prime Minister’s Think Tank, “France-Stratégie”.
- In October we met with Autorité des Marchés Financiers, or more simply, the AMF. AMF is the French government regulatory body for financial markets, and we now have a close relationship with them for future regulatory compliance.
- We are scheduling an initial meeting to on-board the first executive team members in the coming months.