VeradiVerdict - Issue #248
Toku is attempting to reform token compensation and tax compliance across leading crypto-native organizations around the world.
Paying employees in tokens is an attractive option for many cryptonative companies and their team members. However, the process is a nightmare to deal with in terms of both operational procedures and regulatory compliance. Toku simplifies the process through a suite of products and services that crypto brands are increasingly leveraging to pay their customers in tokens. Toku’s services include token payroll, token grant administration, tax compliance, local employment, world-class benefits and distributed HR solutions. Often, designing compliant systems is a huge hurdle for protocols; Toku’s co-founder, Kenneth O’Friel, mentioned that Toku “realized the hardest part isn’t the tokenomics or the software, it’s how to follow the law.” As the regulatory environment increasingly evolves, keeping up with it has become a top priority for crypto companies.
Toku simplifies token compensation and tax compliance through four key products:
Toku Token Payroll: With Toku’s tax compliance platform, organizations are more easily able to pay employees or contractors using tokens and fiat. Toku provides access to a centralized platform that calculates tax withholdings, processes sell-to-cover actions, and pays remittances on token income. Further, the platform generates automated documentation and reporting so everything is in one place and there is proof of income and transparency around tax payments for teams. Local tax and employment laws differ among areas, and Toku provides tailored information and globally compliant payroll processing in order to ensure teams are fully compliant.
Toku Token Grant Administration: Toku’s native token grant administration solutions allow teams to design and manage vesting, cliffs, and lockups. Further, Toku helps each employee (no matter where they are based) fully understand their token incentive awards from a compliance standpoint.
Toku Distributed Employment: Toku provides full-time employment or contractor management solutions in over a hundred jurisdictions around the world. In addition, they provide hands-on visa and immigration support and localized employment agreements tailored to each team’s needs.
Toku Token Cap Table: Toku’s cap table solution allows teams to leverage a token management platform for employees, advisors, and investors.
Toku also provides its customers with its Token Tax Engine, which is a tool for tax calculations and token and fiat compensation. Through this product, they also offer sell-to-cover management: converting tokens to fiat to pay remittances.
Toku has built up an impressive clientele, including cryptonative companies such as Filecoin Foundation, Protocol Labs, Gitcoin, PleasrDAO, Safe, Storyverse, Teller, and more. Enterprises, startups, DAOs, and regulators all are leveraging Toku’s dynamic platform in unique ways for whatever serves their current needs. Christoph Simmche, co-founder of Safe, said about the product: “Toku is on the front lines of solving operational challenges of hiring and compensating contributors. We needed a partner that understands token payroll and token grant administration in different countries. Toku’s solutions allow each contributor to focus on their tasks while knowing their compensation is handled compliantly. They are a partner to us and the broader ecosystem.”
For Protocol Labs, Toku was especially helpful for navigating complex situations abroad. Protocol Labs’ team is fully remote and normally partners with an EOR in a foreign jurisdiction to help navigate employment and compensation in these areas. However, the team recently had to deal with a situation where “an employee had multiple Filecoin vesting token grants, equity grants, and a unique tax and immigration situation” that was not fit for traditional EORs to handle. Protocol Labs attempted to find a solution via internal procedures that were tedious and lengthy, and finally turned to Toku to streamline their token and equity grant administration processes. Toku now automates their tax compliance work in a seamless way via their tailored product suite and deep knowledge of foreign employment and tax regulations.
Toku’s founders are Dominika Stobiecka and Kenneth O’Friel, who met in Tokyo in 2020 and started the company together. Dominika has extensive experience in the public sector, having worked in a research position for the Federal Reserve Bank of Chicago and the European Central Bank, and was also previously at Deutsche Bank. Kenneth has experience at Bank of America and StartX and was also previously a research assistant at Harvard. Stefan Stadlinger joined as Head of Token Product at Toku, having previously worked at a consumer startup and a strategic risk management firm. There are now [x] team members across engineering, product, partnerships, and more.
Toku’s cofounders, Ken O’Friel and Dominika Stobiecka. Source: Fortune Crypto
Regulatory compliance has never been more top-of-mind for crypto companies than now. Toku allows teams to leverage a comprehensive token compensation and tax compliance product suite in order to better serve their customers and fully comply with local tax and employment laws.
- Paul Veradittakit
Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies. Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein. This document does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise. The information and opinions presented in this document are solely those of Paul Veradittakit; they do not represent, and should not be interpreted as representative of, the views of Pantera or any other individual working for Pantera, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations. Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper. Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness. There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate. Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company. Forward-looking statements should not be relied upon, and performance or outcomes may differ materially from what is contemplated herein. Opinions included here incorporate subjective judgments or may be based on incomplete information. This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions.
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Hi, I’m Paul Veradittakit, a Managing Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.