Assessing Crypto-Native Companies

CROs (Cryptonative Remote-First Organizations) are sexy… but do they provide value for startups in the near term?

Intro Notes

This is research. Check with your attorney.

  1. Accounting mostly or fully on-chain (cashflow, contracts, revenue, etc)
  2. Equity, dividend, revenue, and governance distribution on chain (security tokens)

What and how?

Entity Considerations
  • Corporations are taxed on income and shareholders are taxed on dividends, whereas partnerships are only taxed once (on profits).
  • Governance is more flexible (no amorphous fiduciary duties).
  • Series LLC may provide a path with lower overhead for new entities to form if the DAO Factory becomes an important aspect of the business.
  • Profits can be reinvested w/o tax.
  • Securities terms can be more flexible because they may be hybrid debt/equity instruments (like preferred stock) rather than pure equity instruments
  • Tax structure is slightly simpler (no need for K-1 for each partner each year, only 1099 on actual dividends paid).
  • The structure is familiar to investors.
  • Limited distribution to accredited investors (Rule 506(c)), and individual core contributors (those actively managing and building the business) (Rule 701) [Note: only natural persons, not entities, qualify for Rule 701].
  • Need to define limits in selling tokens on secondary markets.
  • A vesting period will apply to all token holders, though this might also remain configurable for each individual.

Short-term why?

Operational Efficiency

  1. Revenue is all (or nearly all) in crypto. Having crypto and fiat would require costly ramp transfers to distribute shares.
  2. Profit can be automatically calculated on some consistent cadence (weekly, monthly, quarterly or annually). A short cadence is preferred for token holders (money now > money later). Calculating this would look like subtracting expenses from total revenue in a given timeframe. Invested capital should be left aside as an operational budget.

Long-term why?

The following are added benefits as a tokenized CRO structure becomes easier to deploy.

If these companies are to become easy to stand up, the ecosystem must dogfood the model to provide example implementations and reduce unknowns.

Ease of Partnerships


The prospect of CROs becoming a viable mass entity structure is growing in potential. Early adopters will have some questions to answer: (Do we *need* a bank account? How to expense minus credit card? How to handle volatile assets? What tools make these things possible?) but they will also break important ground to define usable patterns to be reimplemented by others.



Reviewing ecosystem development strategies including decentralized governance, the promise of DAOs, and an attempt to build sustainable resource engines.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store