Block Ledger Founder Leon // Web3 Accountant Radio Ep17 Transcript
Leon Low is the Founder of Block Ledger and he runs his own ethereum node. Block Ledger is a professional service and accounting firm in Singapore providing services to more than 300 clients over 12 years.
In this conversation, we dive into:
1. Common accounting problems solved for Web3 Startup Founders
2. Is crypto taxable in Singapore
3. Why you should set up in Singapore
4. When should a founder not start a company in Singapore
5. Should startup founders outsource or inhouse finance function
6. Advantage of Block Ledger compared to similar service in the market
7. Why did Leon decide to enter the Web3 space?
8. One key finance / compliance lesson from Leon
9. What is Leon looking forward to in the Web3 space?
10. Would you advise others to run a Eth Validator?
And more!
__________________________________
Connect with Leon & Block Ledger👇
Linkedin: / leon-low/
Website: https://blockledger.sg/
Email: [email protected]
Tg: @leon10w
Hi everyone, welcome to the Web3 Accountant Radio, the podcast where we dive into the fascinating world of the Web3 finance and compliance. I’m today’s host Diana and my partner is Wei Xiang. Hello Wei Xiang.
Hi Diana. And today we have a guest called Leon. Leon is the founder of Block Ledger and he runs his own Ethereum node.
Block Ledger is a professional service and accounting firm in Singapore providing service to more than 300 clients over 12 years. Welcome Leon. Nice to meet you.
Thank you Diana. Yes, thank you for having me here. Yeah, it’s an honor.
Yeah, thank you Leon. So today we are very lucky to have Leon with us. I was teaching at ISCA crypto accounting course a few months back.
And when I was researching on how to teach and what problems I might be facing as a first time lecturer or teacher on something, this topic, and I realized that Leon was also an ISCA teacher on crypto audit, crypto related, finance related topic. This is where I connected with him and I was very thankful where he was warm enough to come out and we met a recent accounting and business show. This is where we caught up and he was very warm enough to say we can have this show recorded together to record this show with somebody with vast experience of four years of experience and even more than that.
And running his own Ethereum validator today, we’ll hear from him himself about Block Ledger. He wear many hats around, but today’s strict focus would be on, at least for now, on for Web3 startup coming into Singapore or for any Web3 founders outside trying to launch their tokens, wondering how do I do the accounting functions in Singapore? Leon, what are the common problems that you are solving for these startup founders? Maybe we can start with this.
I met with a lot of founders, usually, like that’s what you’ve mentioned, those of them, most of them are from Web3 and these founders, they are usually a technical person they are technical person. So they do not have any clue on like company structure, what are the regulation that they need to adhere to, what are the sedentary requirement, like tax filing, annual filing. So as more and more I talk to these founders, I found that that there’s a gap and as an accountant, I would like to help them to close off this gap.
And one more thing to take note of is that I am very familiar with Web3, DeFi, crypto and all that. This is an added bonus I know their business and I also can help them with the tax and all the other sedentary requirements.
Wow. So maybe we’ll focus now on tax itself, because I heard you mentioned tax, what are some of the common tax issues that founders would face that you would have helped in? And can you share some generic tips for us without going into the details, because I understand it differ on a case by case basis.
Yeah, you’re right. A lot of them for tax, right, they are unsure, like whether this is taxable whether these kind of trades are taxable, whether it is not taxable and should they contribute to tax and what are the consequences that if they don’t contribute to tax, because, we have a lot of friends around me, right? They are all, some of them, they are not in the Web3 business, but they are in the Web3 investing. Like a lot of my friends, they buy token and they sell token.
They do investing on a personal level. And they will also come to me and ask me on my personal investment, do I need to pay tax? You know, like no one likes to pay tax, even for me there is one saying that goes about tax and death are like the thing that cannot be avoided, but no one likes to pay tax. I’ll give them a good advice in the nutshell is that in tax, we have something called the Badges of Trade.
Badges of Trade will determine if this transaction is revenue in nature or is capital in nature. If it’s capital in nature it doesn’t need to pay tax. If it’s revenue in nature, it needs to pay tax.
And I will advise strongly to pay the due tax because Singapore tax rates are really not that high. And after paying for tax, right, then you can use your money, like legitimately if not, like when you use your money, if this amount is small, it might not get detected. If the amount is big you might get caught and then you might end up having to pay more fine.
So, yeah, this, like in a nutshell whether things need to be taxed or not and how are we going to treat it. Yeah, this is so exciting. And as we speak today, Bitcoin is at near all-time high or near all-time high, depending on how you look at it.
And it is times like this that people start asking the questions do I need to pay tax? Because they see their crypto prices going up and also at this time, they might want to cash out. And then that’s where they are thinking of this kind of questions. And the last one is I’ve been seeing a lot of interest within service providers as well, asking this kind of questions.
This is where I think Leon would have the vast experience especially, I think, do you cover Singapore or more than Singapore yourself? Oh, I mostly, I only cover Singapore because tax is a territorial basis kind of thing and I’m a certified tax practitioner with ISCA, with the tax association in Singapore so I am more well-versed in Singapore tax. If you want to ask me about other country tax, I might know the general rules, but in detail, right, it’s very tough for me to follow all the other country tax.
If anybody have any queries about tax, maybe individual or business, do reach out to Leon.
Just now, other than tax, I realized that when you talk about Web3 startups, they come to you and they do not know how to structure their companies. What do you think are some factors that the startup founders can think about when they think about whether they want to set up a company in Singapore or maybe in another jurisdiction? Yep. I met with a lot of them and one good things, like one of the reason they choose Singapore other than the political reasons, the tax reasons is that a Singapore company, right, it can be a hundred percent foreign owned the shareholder can be a hundred percent a foreigner, but a lot of countries, right, they don’t allow that, like in some other countries, they need a certain percentage of the shareholders to be local.
And the work around it is that people will ask nominee shareholders, shareholders that only use their name and they don’t actually own the shares but there is a risk in that you can have a legal agreement draft between the company, the shareholder and the nominee shareholder you are only nominee, you are not the real shareholder, but there is still legal implication. And one of the things that Singapore, a lot of my clients choose Singapore is that we can have a hundred percent foreign owned entity. I see.
That’s very true and exciting. The other one that I want to ask you is when should a company founder not start a company in Singapore? Are there cases where you see and you say, no, I don’t think Singapore is a suitable place for you to start a company itself for Web3, especially those maybe releasing tokens or For those, right, that has that need licensing then you need to consider if you want to start in Singapore, because if you start in Singapore, you place all your activity in Singapore, you will be caught under the licensing regime.
And the licensing now, right if you apply for the license, the payment token license, it takes you around like one to one and a half year before you can get your license. You can plan for that.
You know, you might want to have Singapore as one of your HQ. You might want to take the license here. You might want to put your activity here.
But if you are a small company and you only have like one or two legal entity and you are in the phase that you want to build your business, build your product first, and you don’t want to trouble, think about licensing regimes and all that, right, then I will advise you not to start in Singapore first. Start in somewhere that no, that don’t have a strict licensing criteria. Build up your company, build up your platform, build up your product.
When you think you are ready you can consider Singapore. Nice, nice. Because I think Singapore rules are getting stricter, especially in April itself, where they increased the number of activities which they should be caught under license.
The other question for you, Leon, is for a Web3 startup or founder they are thinking, should I do the finance in-house or should I find Block Ledger itself? I think when they start off, maybe they have an outsource accountant or a small accountant that is just doing very basic bookkeeping. And then subsequently they might want to find somebody who have the skill set, which you mentioned tax structuring, opening up of various features. What is your comment on should they look for outsource services or should they look for in-house and which one do you think usually is more suitable for the startup founders? When the startup, startup can be of various sizes as well.
When you are a smaller startup, you want to concentrate more on your product. I will advise you, to outsource accounting, tax, invoicing, because you are at a phase that you need to build a product and that is more important. only when you have grown until a certain size, that I think maybe bringing the finance back in-house will be beneficial to the company because you have more control, you have a faster reaction time, in regards of finance, you can check your AR, AP at a faster pace.
In the beginning, smaller company outsource, larger and more established, I would guess you bring that back in-house. Sounds cool because that’s where I think the finance will have to work closely with the product to build your product and the different strategy, how your data flow from the product to the finance itself.
Thanks a lot for sharing your insights into this, Diana, any questions from you? Oh, yeah, actually, I’m very curious that because we talk about some business before and I would like to know, what business most customer inquiry about? Oh, what business the most customer inquiries about? That is no fixed business that come to us. I see in general from various kinds of company, we have company, in Web3 that does payment, Web3 payment.
They use the credit card work with stable coin making payment. One of our clients does that. we have another one that does, launchpad, they have a launchpad in Web3.
They let other token, lease their token on their website and go to launch their new project. They got a cut of it launchpad kind of model. So I don’t see that is a fixed one, but what I see is that I see a lot more, Solana customer coming to us and ask for inquiries, ask for quote, ask for service Solana.
Oh, so Leon, so for the Block Ledger and, because I think in the markets, there are many other companies provide a similar service. What advantage or characteristics do you think that the block, the block ledger have to compare with the other similar service in the market? A lot of like accounting firm, apart from the traditional accounting firm, I think that what we stand out is that our understanding of Web3 business, our understanding of looking at a blockchain and knowing what transaction that they do, our understanding of what is called a swap, what is called wallet, what is called L1, L2 bridge and all that.
When we’re talking to Web3 clients, right, that makes them a lot easier. You know, it’s like they are talking to someone that knows their lingo and rather than they, some of my clients told me that they go to the traditional accounting firm, what they are telling them, they have, they are very clueless like what is called like what is wallet and all that. So I think this is our biggest advantage.
We really understand Web3. We really understand blockchain. Okay.
Because you said that you really understand Web3. I am very curious about your interest and inspiration to enter the Web3 space. Let’s move to the free talk session.
And in this session, I have a lot of questions about your career or interest about the Web3. The first question is why did you decide to enter the Web3 space? Okay. So I was a CFO with a fintech company previously.
And this fintech company is a payment fintech company. What we do is that we do traditional credit card payment. And while doing this, right, we wanted to explore, how to use a Web3 in terms of network or token to do payment.
We want merchant to be able to accept USDC. We want to explore this area, because, because in the credit card space, right, it’s very competitive and we wanted to have an edge over the other payment company. And this is when I want to look at everything.
I try to understand, Web3. I try to understand DeFi I get my hands dirty and then try to try everything myself. And that is also the time when I got really interested in it.
No, like then every Saturday and every week 10 on my own basis, right. I would do like swap. I would do lending and borrowing I will see which one got the most yield.
It become a hobby of mine and I slowly fall in love with it, you know? It happened that way from work to personal. So with your love, in the career of the Web3, so can you share maybe one key experience or lessons that you have learned in Web3, space in your Web3 journey? One key, please. Okay.
One of them is that at one point of time, you will be more and more into trading because you, I think it’s a whole package kind of progression kind of thing. You know, you cannot like just do swap and everything because it’s a kind of trading swap. So it’s changing one token to another token.
And why do you want to change to another token? Because you think that the other token can, can increase more, increase more. It can bring you more wealth. You know, you can make more money out of it.
Okay. Then you slowly like drop into the rabbit hole got addicted and stuff like that. One of the advice I think is that you need to, in this Web3 space, you need to control yourself.
You need to know, like you need to set aside budget. You need to manage risk. You need to have some coin in your cold wallet, in your hot wallet.
You need, when you trade, right? Don’t, everything try to do at a smaller amount first. Always try. Let’s say for this protocol, you don’t know how this work.
You can use a small amount, like $150 just to try first, try to put in, try to take out, try to bridge it back. We draw and do everything that in that way. Because one of the things that I learned is that there’s in my early days of trading, I do on too much leverage.
And the next day I wake up, my position got liquidated and I lose a bit of money out of that. And that bothered me for like the, the, the one, one whole week like, like I lose like five figure in one night um, it is to, to some people, it’s not a lot of money to me. It’s not a lot.
It’s not lethal but then it does wake me up. Okay. So what are you looking forward to in this area? What I’m looking forward.
Okay. It’s like now the Web3 space. Are still at a very early stage other than all the swap and everything
It’s like there is still no one thing that all the others user of the Web3 space to, to join the Web3 space. Let’s say for, for someone that that is not in the Web3 space, if you ask them to come to the Web3 space, what is the thing that you ask them to come for? And what can they not do in Web2, can only do in Web3? There is like very few, or there is zero now it’s only like all the OG and all the crazy people like me. like go there, speculate and all that, you know. What I hope to see is that right in the future, Web3 blockchain has evolved and into a more useful product that no, it can be used by day to day layman.
Like everyone can use this product, can do something about it. If you ask me what they can do about it, I don’t know, because that product is not out yet. It’s like the internet.
The internet, initially we can only do blogging and stuff like that. Like maybe Friendster, blogging, Facebook, stuff like that. It’s only when we have the e-commerce, the internet payment that everyone start to use and the, the user base of like internet, like Bloom and Skyrocket.
I hope that, we, in the Web3 space, we can also reach that, like it can be a useful product for everyone, not only the young people and the one, the people that are very in love with Web3. I hope that more useful product can become out of Web3. Oh, this is idea.
I have the similar feeling because I also think it’s very hard to introduce the others in the Web2 to Web3 that, and it’s, it’s hard to say that there are something very special in the Web3, but not in the Web2. So you stay very specific and yeah, I also got a similar feeling. Thank you.
Thank you. Great minds think alike.
Leon, so, so I mean, now that you, you, you mentioned this, right. So I got very hard thinking about what happened to, what happened to NFP, like NFT was supposed to be that thing that will bring a lot of, of Web2 people into Web3, trying to buy a piece of art but suddenly, I mean, as of today, I think 90% or even 95% of the NFT have dropped in their value. And yesterday it was the next big thing.
Today is the, I don’t know, the scam. Absolutely
Yes. That’s why it is. I, to me, I think it’s the beginning of internet there is a lot of scam going around because the product and everything are not so matured yet.
So similarly, I think NFT do have a part to play. Recently, in the beginning of this week, we have Switch. It’s a, it’s a government kind of like Fintech kind of expo Switch by the Enterprise Singapore.
Yeah, I was there. Oh, you was there. Okay.
Did you go? Yep. Yep. I went, I went to Switch.
At Switch, I met with someone, he’s from Korea and then he’s coming out with a product. He has already has the product app show like concert ticket using like NFT and all that but he didn’t really make it that he use NFT. It still look like a Web2 product, but it’s powered by Web3.
And I asked him, like, no, why didn’t you want to make it like very Web3? And his answer is that he wanted to be more usable and stuff like that. I think we do have a use case for NFT, but the very first use case was to speculate, like, like people just come out in art, like like, like, like bought ape and everything. And then, and then when you, when you really look at it, right, bought ape, archipenguin and all that, right.
It’s just an image of like a monkey or a rabbit. And then with different kind of style like with a hat, with no hat, with baseball, with soccer and all that. And then, and then the price just like, it’s like, like skyrocketed.
So like, it cannot justify the price and in a way that everything collapsed, people got hurt. When people got hurt, they got like PTSD, like bad feeling and all that like, and then they don’t want to go inside again but then, so I guess that the, the initial phase is always like push my speculation, but the, at the back, right. It’s only when a lot of people like don’t want to do that as a speculation anymore.
I hope the real product can come out like music, like if it’s an art, I hope that it’s a real art and then NFT represent a portion of that real art. Like maybe in that way we can be more, more, more factual, like more, more truth like in a way. Leon, so before this episode, there’s a question that a friend asked me to ask you, because I see that on LinkedIn, you write, you run a Ethereum validator node.
Would you advise anybody else to do it? Is it a fun thing? Is it a must do or like it’s, it feels like you have, it’s a milestone, you have done something amazing. What would you give a comment to somebody who is thinking about doing it? Yeah, I would say it’s, it’s not difficult and in, in Singapore, right, there is a lot of community, that we have a home staking community that you can join. And then we, there is someone that will share how to run your validator nodes.
You don’t need a very expensive machine, a machine that costs around like 500, like CPU, motherboard, hard disk, RAM, that is sufficient to run a home validator node. I would advise if anyone that has interest you can try and because as an accountant, I am more like, how do I say, like more down to earth. I like something that I want to put in my effort.
I wanted to do something that I got contribute. I contribute my computer. I contribute my, my storage space to validate the network, to store data on my hard disk as a node.
And that is like a few thousand nodes in, in the Ethereum network. I don’t know how many thousand there is. And then with all these nodes, we help to keep the network safe and secure and decentralized.
I like this concept and that is also why I ran into doing validation. And I felt that validation is like, it’s like during our parents’ day, it’s like having a shop house and rent it out. You know, during our days like we, maybe we don’t fancy a shop house as much, maybe we like Ethereum, we buy a lot of Ethereum.
So rather than letting the Ethereum sit down there why not like earn a passive income out of it? So that was my, my liking. And I, I went on to learn and all that. And there’s a lot of help available right now, that community that you can join and we help each other to, to set up your validation node.
Nice. I think through, I mean, even before this, this episode, I’m like friends with Leon, but through this episode itself, these 30 minutes, we can see that other than having that knowledge, deep knowledge into finance, Leon is still practicing. He is teaching at ISCA and you can see that his interest, at least from this episode into Web3, is deep and he’s friendly and he’s definitely hands-on.
So today as a founder, today, if you want somebody like this on your side of the team reach out to Leon from Block Ledger. Any other comments you have from Diana or Leon? No, I don’t have.
Okay. Thank you. Thank you.
Thank you so much. Thank you for having me. Yep.