Over the past decade, regulatory uncertainty in the U.S. has driven many US based web3 startups to structure their projects offshore—most notably through the Cayman-BVI setup. But recent developments, including a shift in SEC leadership, a more crypto-friendly administration, passing of the GENIUS Act and progress on the CLARITY Act, are prompting founders to reassess. Meanwhile, domestic alternatives such as the a16z-backed DUNA structure are gaining traction. With this evolving landscape, the question arises: is an offshore structure still necessary? This article explores one more alternative for US founders—Switzerland. This article highlights the key features, benefits, and limitations of Swiss legal structures, such as the foundation and the association, to help US teams evaluate whether they’re the right fit for their project.
The Benefit of Swiss Ecosystem Entities
No matter which type of entity a project team chooses, Swiss ecosystem entities offer some unique advantages. Key benefits include:
- Single-Entity Setup: Swiss ecosystem entities can sell digital assets and conduct commercial activities all under one legal roof. Developers, contributors, and service providers, such as market makers and exchanges, can be engaged directly by the board through contractual agreements. Unlike in other jurisdictions, there’s no need to create subsidiaries, which simplifies governance, cuts costs, and reduces operational complexity.
- Direct Control: Swiss ecosystem entities are typically governed by the core team rather than independent directors. This streamlined approach allows for fast decision-making, efficient operations, and the ability to spend assets or sign contracts without waiting for third-party approvals.
- No Economic Substance Rules: Swiss ecosystem entities are not subject to economic substance requirements and can freely license their intellectual property, such as their source code, to generate operational income. This flexibility enables projects to fund themselves beyond token sales, helping reduce sell pressure and supporting long-term sustainability.
- Mature Ecosystem and Legal Framework: Choosing Switzerland offers the advantage of a sophisticated and mature ecosystem of service providers, including banks, custodians, law firms, tax advisors, and accountants. Switzerland also boasts a complete and robust regulatory frameworks globally, providing legal certainty and confidence for projects and their stakeholders.
- Low Taxation, but Onshore Jurisdiction: What makes Switzerland especially compelling is the favorable tax environment. Depending on the place of incorporation, income tax rates can be as low as 9–12%, and Swiss GAAP accounting standards allow for the deferral of revenue recognition, particularly in the case of multi-year development funding, helping to minimize taxable income.
Switzerland’s strong rule of law, extensive tax treaty network, and globally respected legal framework offers Web3 projects a rare combination of tax efficiency and legal credibility.
The Swiss Foundation: A Proven Framework
For over a decade, the Swiss foundation has been the structure of choice for leading Web3 projects, including Ethereum, Cardano, Cosmos, Dfinity, dYdX, NEAR, Polkadot, Solana, Tezos, and TON. It has earned a reputation as a trusted framework for globally based crypto initiatives. Purpose-driven, regulated, and transparent, the Swiss foundation is designed to foster long-term trust and stability within the ecosystem.
- Clear Purpose and Regulatory Oversight: Swiss foundations are established to pursue a defined public or ecosystem-oriented purpose, which cannot be changed without the approval of the Federal Supervisory Board for Foundations, the authority overseeing all Swiss foundations. They must also prepare audited financial statements, ensuring transparency and accountability. This framework provides stability and predictability for contributors and community members while guaranteeing that all funds are used exclusively to support the ecosystem.
- No Shareholders: Swiss foundations have no owners or shareholders, eliminating external pressure to prioritize profits over mission. This structure ensures that decisions remain fully aligned with the foundation’s purpose, reinforcing long-term commitment to the ecosystem.
- Manageable Costs: Swiss foundations offer cost-efficiency through regulatory predictability, favorable tax treatment, and streamlined structuring. The absence of subsidiaries and independent directors further reduces expenses. If no Swiss team member is available, a local director is required, but this director does not need to manage day-to-day operations, keeping governance simple and cost-effective.
The Swiss Association: A Lightweight Alternative
For projects that prioritize agility, flat governance, or grassroots participation, the Swiss association provides a simple yet powerful legal vehicle. Its real-world appeal is proven by projects such as Aragon, Badger, Casper, Hopr, Linea, and Nillion, which leverage its flexibility to empower communities and scale efficiently. Key characteristics include:
- Fast and Easy Set-up: A Swiss association can be founded in one day, by just two individuals, with no capital requirement and minimal formalities. There is no external supervision or mandatory registration unless the association is commercially active. This makes the Swiss association exceptionally low-cost compared to other structures or jurisdictions.
- Member-Driven Governance: Controlled by its members rather than shareholders, a Swiss association ensures decisions align with the community and mission rather than profit motives. Associations can adopt an open-door membership policy, allowing new members to join formally and participate in governance. This flexibility enables the founding team to gradually transfer authority to the community, fostering decentralized participation while maintaining legal clarity.
- DAO-Compatible: Swiss law allows DAOs to be fully integrated into associations, granting token holders a formal governance role with binding authority. While the founding team can operate centrally, they can also create a dedicated body for token holders, giving them control over key decisions such as approving grants, selecting contractors, or setting license fees for intellectual property.
Considering these features, Swiss associations offer a compelling combination: the legal clarity of an incorporated entity, with the governance flexibility and the ability to implement a DAO-native structure. They are particularly well-suited for early-stage projects, grant programs, and community-run initiatives.
Tax Compliance & Valuation Implications
Whether you choose to domicile in Switzerland, Cayman-BVI, Panama or any other jurisdiction, international entity structures come with unique compliance issues, especially from a tax perspective. Your local tax authority is going to want to make sure that if assets leave their jurisdiction, that they get their fair share. In addition, most tax authorities in the world expect you to declare income received from sources outside of their respective jurisdiction, even in the form of tokens.
- Token Compensation
Web3 projects often incentivize their employees by offering token grants, subject to vesting and lockups. In the US, there is a helpful tax rule that can be used to manage future tax liabilities associated with the receipt of tokens in a compensatory setting, the 83(b) election. Outside of the US, however, token compensation it typically taxed as income upon vesting. However, domestic rules might deviate from this basic rule and local advise is highly recommended.The taxable basis of this income depends on the Fair Market Value (FMV) of the tokens at the time of vesting. However, without considering the true market liquidity of the token that is being received, calculating your taxable base by multiplying the amount of tokens that you receive (Q) by the price(P) of that token at the date of receipt, might materially overstate the FMV.
Depending on the size of the token block relative to the liquidity of that token at the time of vesting, there may be significant slippage-based discounts one can consider. Therefore, make sure to consult with a valuation provider that understands digital assets to achieve a more palatable tax basis of the assets received.
- Transferring IP
When IP is being transferred from one jurisdiction to another, the jurisdiction where the IP is departing from will want to tax the assets transferred. The transfer needs to be on an arm’s-length basis. This means that the value of the assets needs to represent the value that would be paid by two independent market participants. In other words, selling for a low value to avoid taxes is clearly not allowed. Therefore, it is critical to consult an IP valuation specialist with experience in the web3 space to determine and document the FMV of the IP being transferred. This will assist in understanding the value of the IP, and solidify the arm’s nature of said transfer.
- Licensing IP
If instead of transferring the IP is being licensed, the licensing fee (often paid in native token) needs to be on an arm’s length basis too. Hence, it is again important to consult with an IP valuation specialist to determine the FMV of the IP and to solidify the arm’s length nature of the Licensing fee being paid.
- Master Services Agreement
Another common structure involves the Foundation entering into a Master Services Agreement (MSA) with a development company. Under this arrangement, the development company is paid on a cost-plus basis for engineering, marketing, and other services. The markup must reflect what independent service providers would charge to avoid claims of income shifting or related-party abuse. To properly document this, an independent benchmarking study for the markup is required.
Conclusion
New regulations and administrations around the world are changing the game for Web3 founders. In a decentralized world with project teams being dispersed around the world, deciding on where to domicile your company and what international entity structures your project will require is one of the most critical decisions for web3 projects in the earliest stages. It is critical for founders to consider all alternatives.
One of the biggest crypto hubs globally is Switzerland, and for good reason. The Swiss Foundation and Association offer a clear framework that should be considered.
However, when managing international entity structures including Cayman-BVI, Panama, Switzerland or any other jurisdictions, one needs to be aware, and properly plan for, the associated international tax obligations and the need for valuation support.
Navigating these issues is not easy, and it is highly advisable to assemble a team of advisors native to the web3 space to guide you through the process.
The Swiss Foundation, A Good Fit for US based Web3 Projects?
Over the past decade, regulatory uncertainty in the U.S. has driven many US based web3 startups to structure their projects offshore—most notably through the Cayman-BVI setup. But recent developments, including a shift in SEC leadership, a more crypto-friendly administration, passing of the GENIUS Act and progress on the CLARITY Act, are prompting founders to reassess. Meanwhile, domestic alternatives such as the a16z-backed DUNA structure are gaining traction. With this evolving landscape, the question arises: is an offshore structure still necessary? This article explores one more alternative for US founders—Switzerland. This article highlights the key features, benefits, and limitations of Swiss legal structures, such as the foundation and the association, to help US teams evaluate whether they’re the right fit for their project.
The Benefit of Swiss Ecosystem Entities
No matter which type of entity a project team chooses, Swiss ecosystem entities offer some unique advantages. Key benefits include:
Switzerland’s strong rule of law, extensive tax treaty network, and globally respected legal framework offers Web3 projects a rare combination of tax efficiency and legal credibility.
The Swiss Foundation: A Proven Framework
For over a decade, the Swiss foundation has been the structure of choice for leading Web3 projects, including Ethereum, Cardano, Cosmos, Dfinity, dYdX, NEAR, Polkadot, Solana, Tezos, and TON. It has earned a reputation as a trusted framework for globally based crypto initiatives. Purpose-driven, regulated, and transparent, the Swiss foundation is designed to foster long-term trust and stability within the ecosystem.
The Swiss Association: A Lightweight Alternative
For projects that prioritize agility, flat governance, or grassroots participation, the Swiss association provides a simple yet powerful legal vehicle. Its real-world appeal is proven by projects such as Aragon, Badger, Casper, Hopr, Linea, and Nillion, which leverage its flexibility to empower communities and scale efficiently. Key characteristics include:
Considering these features, Swiss associations offer a compelling combination: the legal clarity of an incorporated entity, with the governance flexibility and the ability to implement a DAO-native structure. They are particularly well-suited for early-stage projects, grant programs, and community-run initiatives.
Tax Compliance & Valuation Implications
Whether you choose to domicile in Switzerland, Cayman-BVI, Panama or any other jurisdiction, international entity structures come with unique compliance issues, especially from a tax perspective. Your local tax authority is going to want to make sure that if assets leave their jurisdiction, that they get their fair share. In addition, most tax authorities in the world expect you to declare income received from sources outside of their respective jurisdiction, even in the form of tokens.
Web3 projects often incentivize their employees by offering token grants, subject to vesting and lockups. In the US, there is a helpful tax rule that can be used to manage future tax liabilities associated with the receipt of tokens in a compensatory setting, the 83(b) election. Outside of the US, however, token compensation it typically taxed as income upon vesting. However, domestic rules might deviate from this basic rule and local advise is highly recommended.The taxable basis of this income depends on the Fair Market Value (FMV) of the tokens at the time of vesting. However, without considering the true market liquidity of the token that is being received, calculating your taxable base by multiplying the amount of tokens that you receive (Q) by the price(P) of that token at the date of receipt, might materially overstate the FMV.
Depending on the size of the token block relative to the liquidity of that token at the time of vesting, there may be significant slippage-based discounts one can consider. Therefore, make sure to consult with a valuation provider that understands digital assets to achieve a more palatable tax basis of the assets received.
When IP is being transferred from one jurisdiction to another, the jurisdiction where the IP is departing from will want to tax the assets transferred. The transfer needs to be on an arm’s-length basis. This means that the value of the assets needs to represent the value that would be paid by two independent market participants. In other words, selling for a low value to avoid taxes is clearly not allowed. Therefore, it is critical to consult an IP valuation specialist with experience in the web3 space to determine and document the FMV of the IP being transferred. This will assist in understanding the value of the IP, and solidify the arm’s nature of said transfer.
If instead of transferring the IP is being licensed, the licensing fee (often paid in native token) needs to be on an arm’s length basis too. Hence, it is again important to consult with an IP valuation specialist to determine the FMV of the IP and to solidify the arm’s length nature of the Licensing fee being paid.
Another common structure involves the Foundation entering into a Master Services Agreement (MSA) with a development company. Under this arrangement, the development company is paid on a cost-plus basis for engineering, marketing, and other services. The markup must reflect what independent service providers would charge to avoid claims of income shifting or related-party abuse. To properly document this, an independent benchmarking study for the markup is required.
Conclusion
New regulations and administrations around the world are changing the game for Web3 founders. In a decentralized world with project teams being dispersed around the world, deciding on where to domicile your company and what international entity structures your project will require is one of the most critical decisions for web3 projects in the earliest stages. It is critical for founders to consider all alternatives.
One of the biggest crypto hubs globally is Switzerland, and for good reason. The Swiss Foundation and Association offer a clear framework that should be considered.
However, when managing international entity structures including Cayman-BVI, Panama, Switzerland or any other jurisdictions, one needs to be aware, and properly plan for, the associated international tax obligations and the need for valuation support.
Navigating these issues is not easy, and it is highly advisable to assemble a team of advisors native to the web3 space to guide you through the process.