Cryptocurrencies in corporate payments. Is it legal?

Microsoft, Tesla, Amazon, WordPress, PayPal, Dell, Time, Overstock, Steam, Virgin Galactic, Bloomberg, Square — these are just a few names from as many as 100,000 organisations around the world that use cryptocurrencies in their workflow on a daily basis.

The reasons for such an explosive growth are quite obvious: major companies follow mass demand for cryptocurrencies from individuals and respond to smooth transformation of global financial landscape. The truth is, the corporations ignoring these tools right now are at risk of losing their competitive advantages in the future.

Here are some fundamental benefits brought to companies by cryptocurrency payments:

• Getting to the global market and gaining an edge over competitors which are yet to implement cryptocurrencies in their payments;
• Low transaction costs;
• 24/7 access to financial service, not only on bank working days;
• High-speed processing of transactions (ten minutes as a maximum). By comparison, any traditional trans-border transactions usually take between 3 and 10 days;
• Reliability: private and public encryption keys and maths algorithms are the core elements of the system sustainability;
• No state boundaries and disengagement from political environment;
• Open pricing without the influence of central banks;
• Elimination of intermediaries, such as bankers, brokers, correspondent banks, SWIFT banking system and etc;
• A chokehold on funds: banks are not able to use your assets and, therefore, you are immune to unexpected bank failures like the Lehman Brothers crash in 2008 (the story is a subject to Margin Call movie, which we highly recommend). Moreover, your funds are safe from the government confiscation (we remember how it happened with Cyprian bank depositors in 2013).

How to use cryptocurrencies

First of all, it is important to realize that all transactions with cryptocurrencies should be registered properly, even though, cryptocurrency regulation is in its infancy and the crypto market still triggers memories  Wild West, do not use cryptocurrency as a means of tax evasion.

Cryptocurrency transactions are no different from traditional payment methods when it comes to enterprise settlements, therefore, if you intend to use cryptocurrencies for illegal purposes, you are certainly going to get in trouble.

Where to start

The main delusion related to cryptocurrencies in business community is their illegality. In fact, cryptocurrencies are currently forbidden in less than 5 countries, but even there governments are likely to revise their policies, as it has recently been done by Thailand.

So, if you are eager to use cryptocurrencies in corporate payments, the first thing you should do is research the legal status of cryptocurrencies in your country. You can read more on this in Wikipedia: Legality of bitcoin by country.

Depending on jurisdiction, cryptocurrencies could be classified in various ways, such as:

• Means of payment;
• Digital goods;
• Private funds;
• Financial placements;
• Foreign currency;
• Digital currency.

Some countries even apply barter regulation of cryptocurrencies: for instance, in Spain bitcoin is considered a commodity.

Once the legal status of cryptocurrencies is clear, it is important to take a close look at the relevant regulatory documents. Hereupon, you can use cryptocurrency as a payment method. If you live in a country where the supremacy of law is undoubted, you risk nothing.

Potential difficulties

However, there is always a fly in the ointment. Here are some pitfalls that suppress mass adoption of cryptocurrencies by corporations:

Transparency. A strong requirement for corporate usage of cryptocurrencies as established payment facility is transparency. Despite being one of the key advantages of cryptocurrencies, the anonymity of transactions is not appropriate for organizations: while companies can legally accept cryptocurrency payments from individuals, this is different in intercorporate settlements, which require full publicity for all transactors.

Financial instruments. Organizations need a full range of financial instruments: bills of credit, debt financing, overdraft, factoring, collection payments and etc. Cryptocurrency market still lacks appropriate substitutes to these tools, but they are essential to the companies intending to use digital assets in their operations.

Integrations. Absence of integration with ERP/CRM systems as well as lack of capabilities of exporting transaction from blockchain. Transferring all the data manually is infeasible these days.

Reliability. Not a day goes by without yet another hack, which gives rise to new doubts and concerns in business community.

Legal support. What can you expect if at the end of a deal you get just a digital document verified with e-signature? What is a legal status of such contracts and how it varies in different countries? And what will dispute settlements look like in the world of cryptocurrencies? Unless there are adequate responses to these questions, not a single company without a strong legal department will embrace the technology. Business community is usually close-minded to such things, and cryptocurrency payments should go hand in hand with a strong legal support.

Jincor

All the shortcomings related to the applications of cryptocurrencies in corporations listed above lay the groundwork for development of a unified enterprise ecosystem, which would give organizations an appropriate digital environment with all the instruments they need. And this is exactly what we do in Jincor.

Jincor is an enterprise blockchain ecosystem, which provides organisations with safe and decentralised environment for corporate communications, both internal and external, and lets them easily conduct secure and transparent transactions using cryptocurrencies and smart contracts. Jincor ecosystem makes it possible for organizations to benefit from blockchain technologies without having to develop and implement them on their own. These include cryptocurrency payments, smart contracts of all sorts (labor contracts, contractual agreements, billing documents, property rights and other), annuity payments and etc.

How it works: an organisation signs up on the platform and gets a unique digital ID with public profile, which can be later verified by its business partners. It also gets one or more cryptocurrency accounts, which can be used for intercorporate payments, paying wages (every employee within the organization has his own cryptocurrency wallet), distributing dividends and other regular operations.

Our team has been developing Jincor since May 2016, and now we make finish touches on the product before shifting to closed beta-testing phase. To get an early access to beta you can subscribe to it on jincor.com.

Although Jincor is backed by several long-term investors, further development of the platform, carrying out legal expert examination and getting to the global market requires extra funding, which we are going to raise by running an ICO campaign — putting on sale most of issued JCR tokens.

You have a unique chance to buy this tokens with a 50% discount on pre-ICO (Jincor pre-ICO starts on August, 21st).