Crypto payroll firm Toku raises $20 million amid industry-wide shift toward compliance
Toku, a startup specializing in token-based payroll and tax compliance, has raised $20 million in funding. The company’s unique approach is designed to help crypto businesses maintain regulatory compliance amid increased scrutiny from regulators. With its innovative solutions, Toku aims to provide a much-needed helping hand to the crypto industry in these uncertain times.
The initial round was led by Blockchain Capitalwith participation from GMJP, OrangeDAO, Reverie, Quantum stamp, Next Web Capitallike angel investors Cameron and Tyler Winklevosslaw firm Orrick, the founders of Protocol Labsand infrastructure company Alchemyaccording to the press release.
The investment, it said, will accelerate Toku’s global expansion.
Japan-based former stock trader Ken O’Friel co-founded Toku with veteran banker Dominika Stobiecka to help crypto companies comply with a number of international tax rules and obligations regarding crypto-based wages.
O’Friel noted that at the start of the 2022 market, most crypto companies did not have compliance at the top of their priority lists, Fortune reported. But that was about to change quickly after the FTX collapse, fixing the global regulatory eye firmly on the crypto sector.
According to Fortune, O’Friel has pointed out that in the early stages of the 2022 bull market, compliance was not a top priority for many crypto companies. However, the recent collapse of FTX and the increased regulatory scrutiny that followed has brought compliance to the forefront of industry concerns. As a result, many crypto companies are now prioritizing regulatory compliance.
O’Friel was quoted as saying:
“We realized that the hardest part is not tokenomics or the software, it’s how to follow the law.”
The startup has created a system to track tax laws and regulations affecting crypto in dozens of countries, the co-founder told Fortune. It has around 30 clients, mostly “businesses that have lawyers”, as well as decentralized autonomous organizations (DAOs), including Aragon, A star, Filecoin Foundation, Gitcoin, Gnosis, Hedera Hashgraph, PleasrDAO, Protocol Labs, Says, Secure, Storyverseand others.
The report noted that
“In the coming year, Toku plans to attract clients from the venture capital industry as well.”
Toku co-founder Stobiecka, meanwhile, brings experience from his work in the US Federal Reserve of Chicago, the The European Central Bank, the German bank, and DAOs. She met O’Friel in Tokyo, and the two were joined by gaming chief Michael Carter, who also serves as chairman of Toku.
To build Toku’s platform, founded in 2021, the co-founders had to review the tax laws of more than 100 countries, O’Friel told Fortune, adding up to a “huge legal bill” that he says will actually “put the startup in a position to be a leader in the ever-emerging field of token-based compensation.”
Toku’s suite of services includes token-based payroll, token-based grant management, employment and tax compliance, and WorkDAO – a set of employment and compensation services tailored to the needs of DAOs, the company said.
Christoph Simmchen, the co-founder of Gnosis Safe, was quoted in the press release as saying that “we needed a partner who understands token pay and token grant administration in different countries,” and that “Toku’s services allow each contributor to focus on their tasks while knowing that the compensation theirs are handled accordingly.”
O’Friel added,
“There are clear laws and regulations around how people are hired and compensated that have existed for hundreds of years. These laws are not going away, and organizations must follow them for the industry to grow.”
The press release noted that Toku also brought in senior legal partners Craig Schmitz (from Goodwin) and Clem Roberts and Joseph Perkins (from Orrick), who invested and played “an instrumental role” in the legal infrastructure and product design of the company. In addition, the investors founder Walter Kortschak (Summit Partners, Firestreak Ventures) and Josh Buckley (Buckley Ventures) has joined Toku’s board.
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