KPMG report: Cooperatives as an ownership model for digital networks
Use of cooperatives in cases where existing models of granting ownership may fall short
Use of cooperatives in cases where existing models of granting ownership may fall short
Credit unions, rural utilities, insurance companies, and agriculture producers often organize as cooperatives. Web3 companies may want to consider adding cooperatives to their ownership structures, which could boost participation and reduce regulatory risk, while giving users more control of the digital networks they use and a share of the value they create.
The Securities and Exchange Commission (SEC) has consistently declined to classify cooperative memberships as securities, enabling cooperatives to distribute ownership to users quickly and easily, while also offering important protections to their members. Giving users ownership through cooperatives may also provide builders and investors a better return on investment than if they shared ownership with users through tokens alone because cooperative structures reward users in proportion to their participation and consistently may provide a stronger incentive than tokens for users to engage with and strengthen digital networks.
Read a January 2023 report [PDF 7.9 MB] prepared by KPMG LLP and other contributors that discusses the use of cooperatives in cases where existing models of granting ownership may fall short.
For more information, contact KPMG’s National Director of Cooperative Tax Services:
David Antoni | dantoni@kpmg.com
Associate National Director of KPMG’s Cooperative Tax Services:
Brett Huston | bhuston@kpmg.com
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