How to Choose an Overseas Coin Issuance Entity for RWA Projects

With the continuous improvement of the RWA regulatory framework, overseas RWA projects are increasing. The core of RWA projects lies in the tokenization of real-world assets. Due to strict compliance requirements for token issuance in various countries, project parties must prioritize compliance. The choice of the issuing entity is a fundamental yet critical aspect of compliance issues related to token issuance.

In recent years, Singapore has gradually become a "cryptocurrency paradise" favored by cryptocurrency entrepreneurs and investors due to its open regulatory attitude and完善的制度框架. Choosing the Singapore foundation as the issuing coin entity for the RWA project seems to be a natural choice.

The Concept and Characteristics of the Foundation

Although the definition and structure of "foundations" vary from country to country, most foundations share the following characteristics:

• Non-profit and public welfare: The foundation is established for public welfare purposes, and its operating income is solely used for reinvestment, without distributing benefits to members. Unlike a company, the foundation has no shareholders, only members.

• Independent Legal Entity: The foundation is an independent legal entity with its own assets and internal governance structures, such as a board of directors and a supervisory board responsible for daily management.

In contrast, traditional "funds" are essentially a type of investment tool or a collection of capital pools. Commonly seen in the financial industry, "fund companies" are actually "fund managers" who raise funds and manage them by issuing "fund products", completing the "raising, investing, managing, and returning" process, and charging management fees from it.

Reasons Why the Cryptocurrency Industry Favors Foundations

1. The non-profit and public welfare characteristics of the foundation align with the decentralized concept of the cryptocurrency industry. The foundation does not distribute benefits to members; members participate in governance merely as administrators, which coincides with the community autonomy framework advocated in the Web3 field. Choosing a foundation as the main entity is beneficial for project packaging and promotion, making it easier to gain the trust of investors and community participants.

2. The influence of the Ethereum Foundation as an industry benchmark. As the second largest cryptocurrency in the world, Ethereum's foundation model has had a demonstrative effect on many Web3 entrepreneurs.

3. Tax incentives. Many countries offer tax exemptions or incentives to foundations after meeting certain conditions, which can reduce project operating costs.

4. Mature systems. Foreign foundations have undergone long-term development, with a complete and mature institutional framework that aligns with the demands of the cryptocurrency industry. Young professionals in the industry are also quite interested in this traditional "old money" form.

It is important to note that, from a legal perspective, token issuance does not have to be conducted through a foundation. The project team can also choose a profit-making entity such as a private limited company or a joint stock company as the issuer of the coin. The choice of a foundation is more based on commercial considerations such as project promotion, operational costs, and tax planning.

In addition, as a non-profit organization, the foundation is often unable to open accounts with commercial banks in many countries or regions. Therefore, if the foundation is chosen as the issuing coin entity, it is usually necessary to establish a private limited company to support it.

Overview of the Singapore Foundation

"Singapore Foundation" is actually a common term used within the industry. There is no concept of a foundation in the traditional sense in Singaporean law (Foundation). The so-called "Singapore Foundation" in the industry refers to a legal entity recognized as a "Not-for-Profit Organization" (Not-for-Profit Organization) under Singaporean law, which includes public companies limited by guarantee, associations, or charitable trusts, etc. RWA project parties usually choose the company limited by guarantee as the legal entity. Therefore, the so-called "Singapore Foundation" in the cryptocurrency industry is actually a company limited by guarantee recognized as a "Not-for-Profit Organization."

The Singapore Foundation is no longer an ideal choice

Although from a legal perspective, the Singapore authorities have not explicitly prohibited Singapore foundations from being the issuing entity for coins, in practice, it has essentially been blocked. In recent years, numerous compliance and regulatory issues have arisen for cryptocurrency companies established in the form of Singapore foundations. Under pressure from public opinion and policy regulation, the Singapore authorities, led by ACRA(, the Accounting and Corporate Regulatory Authority), have significantly tightened the approval process for foundations engaged in the cryptocurrency industry.

Currently, ACRA conducts detailed background checks when registering foundations, and once it discovers any potential association with the cryptocurrency industry, it generally does not approve the registration application. Therefore, while the RWA project chooses Singapore foundations as the issuing coin entity may still be legally feasible, it has become almost impossible in practice.

Other issuers available for RWA projects

1. American Foundation

The logic of choosing the American foundation as the issuer of the coin is basically consistent with that of choosing the Singapore foundation, with the main difference being that the current attitude of American regulatory agencies towards token issuance activities is relatively open. The registration cycle for American foundations is relatively fast, with simple threshold requirements and fewer restrictions. Taking Colorado as an example, it usually takes about a week to complete the registration of a non-profit foundation.

2. UAE Foundation or DAO organization

The overall structure of the UAE Foundation is quite similar to that of the Singapore Foundation. It should be noted that Singapore is under the Anglo-American legal system, while the UAE is under Islamic law, and there are significant differences between the two in terms of applicable laws, judicial systems, etc., which is crucial when dealing with complex compliance issues across legal jurisdictions.

The DAO organization ( decentralized autonomous organization ) is a new form of organization based on blockchain technology, achieving autonomy through smart contracts. The UAE has introduced a complete set of regulations and a regulatory framework for DAO organizations. According to the regulations, DAO organizations in the UAE have independent legal personality and non-profit characteristics.

The UAE foundation or DAO organization is also an optional issuer of coins, but the registration cost is relatively high and is more suitable for projects of a certain scale.

Considerations for Choosing the U.S. Foundation as the Issuer of Coins

1. Obtain the necessary licenses, such as the MSB license issued by FinCEN.

2. The tense geopolitical relationship between China and the United States leads to frequent changes in the regulatory attitude and力度 of the United States towards offshore companies, bringing uncertainty to long-term compliance operations.

3. The financial and corporate commercial laws in the United States are extremely complex, requiring a systematic understanding of federal and state laws, with a high degree of compliance difficulty and complexity.

4. The American tax authority (IRS) has strict reviews, requiring support from a professional tax planning team to handle related tax issues and avoid the impact of the U.S. long-arm jurisdiction on corporate affiliates.

In the current context where the regulatory landscape of the global cryptocurrency industry is still unclear, Chinese project teams must adhere to the principle of "compliance first" when implementing RWA projects. Project teams need to work closely with a professional legal team specializing in the cryptocurrency industry to jointly advance the project's implementation.