written by Colin Wood
About two-thirds of the Fortune 500 companies are incorporated in Delaware and enjoy tax benefits and special courts for resolving business disputes. But a small Native American tribe in South Carolina wants to usurp Delaware’s status as the country’s preeminent tax haven, and it’s starting with cryptocurrencies.
The Catawba Indian Nation, a group of about 3,500 people living 30 miles south of Charlotte, North Carolina, last month announced the regulation of stablecoins, a digital currency aimed at bringing financial stability to the volatile cryptocurrency market. announced the proposal. By borrowing banking codes used in other states, such as North Dakota, South Dakota and Wyoming, and tweaking the general legal framework, the tribe can help people when they want to start a cryptocurrency venture. We aim to be the place to go.
The project Catawba Digital Economyis a corporation formed last February that gives it the same sovereignty and legal powers as any other state, according to CEO Joe McKinney. McKinney said the zone’s legal framework had been developed over several years, and the launch was a milestone in a project with great “benefit potential.”
McKinney hopes the zone will eventually replace Delaware as a place to remotely incorporate businesses seeking tax benefits, but it starts with “Web3.” Decentralized economic and legal endeavours. This includes stablecoins that seek to lock their value into traditional currencies and commodities such as US dollars and gold.
“I am not clear on US stablecoins,” McKinney said. “This is not an example of over-regulation or under-regulation. I think it helps provide clarity from a consumer protection standpoint and at the same time helps us be careful not to stifle innovation.”
McKinney says the Catawba digital zone is where it provides that clarity. It exercises many of the same legal powers as larger government agencies but is “more agile”, making the zone more sensitive to changes in the industry. He said it could be.
“Delaware doesn’t have any rules or regulations specifically for Web3,” he said. “They have good precedents and the courts are adding principles ad hoc.
McKinney also touted the Zone’s digital-first culture. The physical paperwork business has to be filed elsewhere and it’s not there. He said Zorn will begin applying for LLC status online later this week, with additional services to follow.
Alongside the recent stablecoin draft regulations, the Zone recently submitted regulations on Decentralized Autonomous Organizations (DAOs) for comment. This is a bottom-up legal structure that is popular among the cryptocurrency crowd. Zone regulations allow DAOs to be recognized like more common business organizations such as LLCs.
“The reason this helps is that current DAOs are inherently [Discord channels] We use the public blockchains associated with them,” said McKinney. “From a legal point of view, they often operate as a general partnership, which is very bad from a liability point of view.”
McKinney admitted that fraud is rampant Pranks like the recent collapse of crypto exchange FTX, which he called “Ponzi schemes,” are largely avoidable with the right rules. Governance boards, regulations and procedures, such as those used in traditional banking, can create guardrails to protect consumers.
“If you want a stablecoin, it has to be a regulated entity, it needs 1:1 backing, and it needs the same reporting as a regular financial institution,” he said.
Congressmen and Regulators responding To the fiasco of FTX. But even with the limelight, McKinney says he hasn’t moved as fast as the Catawba Digital Economic Zone.
“National level organizations are really important now,” he said. “Congress has moved too slowly on even these issues after these effects have receded. Congress still has a long way to go before it can pass holistic blockchain and stablecoin bills. But something has to happen. States and state-level jurisdictions will pick up the slack.”