Comparison and Analysis of RWA Project Coin Issuance Entities: Singapore, the United States, and the UAE

How to Choose Overseas Coin Issuers for RWA Projects?

With the continuous improvement and development of the RWA regulatory framework, more and more RWA projects are beginning to land overseas. The core of RWA projects is the tokenization of real-world assets. When it comes to the issuance of tokens, due to the high compliance requirements imposed by the regulations of various countries, project parties must prioritize compliance when promoting RWA projects. The choice of the issuer is a fundamental yet very critical aspect of the compliance issues surrounding token issuance.

In recent years, due to an open regulatory attitude and a well-established institutional framework, Singapore has gradually become a "cryptocurrency paradise" favored by entrepreneurs and investors in the cryptocurrency industry, and choosing the Singapore foundation as the issuing entity for the RWA project seems to have become "a matter of course."

1. The Concept and Characteristics of a Foundation

Although different countries have their own definitions and structures for "foundations" in their laws, most foundations at least possess the following characteristics:

  • Non-profit and public welfare: The foundation is established for public welfare purposes, and the income generated from its operations can only be reinvested in the foundation and cannot be distributed to members as profits. Unlike a company, a foundation has no shareholders, only members.

  • Independent legal entity: The foundation, as an independent legal entity, possesses its own assets and internal governance structure. Some foundations have a board of directors and a supervisory board responsible for managing daily operations.

In contrast, the traditional concept of a "fund" essentially belongs to a type of investment tool or a collection of capital pools. In the financial industry, what is commonly referred to as a "fund company" is actually a type of "fund manager". Fund companies raise investor funds by issuing "fund products" to form a capital pool, and through managing that capital pool, they generate returns for investors, ultimately completing the "raising, investing, managing, and returning" of the fund, while collecting management fees from it.

"基金"(Fund)、"基金会"(Foundation)Although they are similar in everyday expression, the meanings they convey on a legal level are vastly different.

Web3 Lawyer's 25-Year Interpretation: How to Choose the Coin Issuing Entity for RWA Projects Going Overseas? Is the Singapore Foundation Still "Hot Cake"?

II. Reasons for Choosing a Foundation in the Cryptocurrency Industry

First of all, foundations usually have non-profit and public welfare characteristics, and their purpose is to promote the development of social public welfare rather than to maximize the interests of centralized institutions or specific individuals, which corresponds exactly to the decentralized characteristics of the cryptocurrency industry. Furthermore, foundations do not distribute benefits to organizational members; members only participate in governance as managers. This characteristic also aligns with the community self-governance framework advocated by the cryptocurrency industry and the Web3 field. Therefore, choosing a foundation as the main entity not only benefits the project party in packaging and promotion but also makes it easier to gain the trust of investors and community participants.

Secondly, more and more project parties are using foundations as project entities, largely influenced by the well-known Ethereum Foundation. As the second largest mainstream cryptocurrency by market capitalization globally, Ethereum (ETH) also chose a foundation as its operating entity. Due to Ethereum's important position in the cryptocurrency industry, second only to Bitcoin, the Ethereum Foundation naturally has a significant influence, impacting many new Web3 industry entrepreneurs and players to choose foundations as entities.

Finally, due to the non-profit nature of the foundation itself, in the laws of many countries, the foundation can obtain tax exemption rights or specific tax benefits after meeting certain conditions or obtaining specific approvals. Therefore, choosing a foundation as the issuer of the coin can enjoy tax reductions or benefits, thereby reducing project operating costs.

In summary, the foundation has undergone long-term development abroad, and its institutional framework is very well-developed and mature. Moreover, the characteristics of the foundation are highly aligned with various real demands in the cryptocurrency industry. Additionally, due to the significant trend of younger practitioners and participants in the cryptocurrency industry, they are also very interested in this type of foundation, which is known to the traditional "old money" and is a relatively serious entity. Therefore, this concept has gradually become a trend in the coin circle, attracting more and more attention.

However, it should be noted that, from a legal perspective, completing a token issuance does not necessarily require a foundation as the issuing entity. RWA project parties can also choose traditional profit-oriented entities such as private limited companies or joint-stock companies as the issuing entities. Most project parties choose foundations as the issuing entities, possibly more for comprehensive considerations from commercial perspectives such as project promotion, operational costs, and tax planning. Therefore, practitioners do not need to overly revere foundations; they are not the only issuing entities for RWA projects. Moreover, as a non-profit organization, while a foundation can accept cryptocurrency assets, it may not be able to open accounts normally in commercial banks in many countries or regions. Therefore, if a foundation is used as the issuing entity, it usually requires the establishment of a private limited company to complement it.

3. Singapore Foundation and Its Advantages

It is important to note that the "Singapore Foundation" is more like a customary term within the cryptocurrency industry. From a legal standpoint, there is actually no concept of a foundation in the traditional sense in Singaporean law (Foundation). What is commonly referred to as the "Singapore Foundation" in the cryptocurrency industry actually refers to a legal entity recognized as a "Not-for-Profit Organization" (Not-for-Profit Organization) under Singapore law. Many types of legal entities can be recognized as non-profit organizations, such as public companies limited by guarantee (Public Company Limited by Guarantee), societies, or charitable trusts. For RWA project parties, it is common to choose the guarantee company as this legal entity. Therefore, what is referred to as the "Singapore Foundation" in the cryptocurrency industry is actually a guarantee company recognized as a "Not-for-Profit Organization."

The main reasons why the cryptocurrency industry often chooses the Singapore foundation as the issuer of coins are as follows:

  • The Singapore authorities hold a relatively open and inclusive attitude towards the entry of the cryptocurrency industry into Singapore. This is specifically reflected in the approval of foundation registration applications as the entities issuing coins. At that time, many cryptocurrency projects could easily pass the relevant approvals and complete token issuance in the form of Singapore foundations.

  • The Singapore government actively supports the development of blockchain and cryptocurrencies, providing a globally leading legal framework and regulatory environment for token issuance activities. Cryptocurrencies are not only recognized as legal in Singapore, but any contracts involving cryptocurrencies will not be deemed illegal solely because they involve cryptocurrencies. At the same time, Singapore has also established a comprehensive legal framework for cryptocurrencies, with relevant laws and regulations covering all aspects including ICO( initial coin offerings), taxation, anti-money laundering/anti-terrorism, and the purchase/trading of virtual assets.

  • Singapore has a highly developed financial and legal infrastructure, which has attracted significant attention from various international capital for a long time, and it has a good international reputation. Therefore, establishing an issue coin entity in Singapore will give the project higher credibility and professionalism. At the same time, Singapore and China are both in the UTC+8 time zone, which means there is no time difference between the two, making it very friendly for the large number of Chinese players and project parties in the crypto space.

So, at present, can the RWA project still choose the Singapore foundation as the coin issuance entity?

From a purely legal perspective, the Singapore authorities have not explicitly prohibited Singapore foundations from acting as an issue coin entity in Singapore. However, in recent years, many compliance and regulatory issues have arisen for cryptocurrency companies established in the form of Singapore foundations. Subsequently, due to public opinion and policy regulatory pressures, the Singapore authorities, led by ACRA( the Accounting and Corporate Regulatory Authority), began to significantly tighten the approval process for foundations engaged in the cryptocurrency industry.

As of now, it can be confirmed that ACRA will conduct a detailed background check on the foundation during its registration. Once a potential connection between the foundation and the cryptocurrency industry is discovered, the registration application is generally not approved. Therefore, while the RWA project choosing a Singapore foundation as the issuer of the coin still has legal feasibility, it has essentially been blocked on a practical level.

Web3 Lawyer's 25-Year Interpretation: How to Choose the Coin Issuing Entity for RWA Projects Landing Overseas? Is the Singapore Foundation Still "Hot Cake"?

4. Other optional issuing entities for RWA projects

Besides the Singapore Foundation, the RWA project can also consider the following two options as the issuing coin entity:

  1. American Foundation

The logic of choosing the American Foundation as the issuer of the coin is basically consistent with the logic of choosing the Singapore Foundation as the issuer; the biggest difference between the two is that the current attitude of American regulatory agencies towards token issuance activities is still relatively open.

The registration cycle for foundations in the United States is relatively fast, with simple threshold requirements and fewer restrictions. For example, in Colorado, registering a nonprofit foundation usually can be completed within a week.

  1. UAE Foundation or DAO organization

The overall structure of the UAE foundation is also quite similar to that of the Singapore foundation. However, it is important to note that Singapore and the UAE belong to different legal systems. Singapore is a common law country, while the UAE is an Islamic law country, and there are significant differences between the two in terms of legal applicability, judicial systems, and so on. This is crucial when dealing with complex compliance issues across legal jurisdictions.

The DAO organization ( Decentralized Autonomous Organization, a decentralized autonomous organization ), is a form of organization based on blockchain technology that achieves autonomy through smart contracts. In response to this novel form of organization, the UAE authorities have introduced a complete set of regulations ( "DAO Association Regulations" ) and a corresponding regulatory framework. According to the relevant regulations, DAO organizations in the UAE have independent legal personality and also possess non-profit characteristics.

At the same time, a certain exchange has officially reached a $2 billion investment deal with the Abu Dhabi investment institution MGX, marking the first time this exchange has introduced external institutional investors since its establishment. One of the co-founders of this investment institution MGX is the Abu Dhabi sovereign fund of the UAE. The strong alliance between the UAE sovereign fund and the largest mainstream exchange in the crypto space is expected to further promote the development of the cryptocurrency industry in the UAE. Therefore, in the long term, the prospects for crypto development in the Middle East are indeed worth looking forward to.

In summary, the UAE foundation or DAO organization is also a viable option for issuing coins. However, choosing to register a foundation or DAO in the UAE will incur relatively high costs, making it more suitable for projects of a certain scale.

V. Risks and Considerations of Choosing the U.S. Foundation as the Issuer of Coins for the RWA Project

First, issuing tokens in the United States in the form of a foundation requires obtaining the corresponding licenses, such as the MSB license issued by the Financial Crimes Enforcement Network (FinCEN).

Secondly, due to the tense geopolitical relations between China and the United States, the U.S. regulatory attitude and intensity towards offshore companies often change, which brings uncertainty to the company's long-term compliance operations.

Moreover, the financial and corporate commercial laws in the United States are exceptionally complex, requiring a systematic understanding of federal and state laws, which makes compliance more difficult and complicated.

Finally, the tax review by the American tax authority (IRS) is very strict, as the American proverb goes: In life, only death and taxes are inevitable. Therefore, establishing a foundation in the United States requires the support of a professional tax planning team to handle related tax issues; otherwise, associated persons of the enterprise are at risk of being affected by the long-arm jurisdiction of the United States.

Web3 Lawyer 25 Years Interpretation: How to Choose the Issuer for RWA Projects Going Overseas? Is the Singapore Foundation Still "Hot Cake"?

6. Conclusion

In the current context where the regulatory landscape of the global cryptocurrency industry remains unclear, Chinese project teams must adhere to "compliance first" when implementing RWA projects. Therefore, RWA project teams need to actively collaborate closely with professional cryptocurrency industry legal teams to jointly promote the project's implementation.

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ChainSauceMastervip
· 4h ago
Who wouldn't play with regulation?
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StakeHouseDirectorvip
· 15h ago
Opening a runway in Singapore, right?
View OriginalReply0
SchrodingerProfitvip
· 15h ago
Is Singapore rolling like this now? It's not as good as Dubai.
View OriginalReply0
LuckyBlindCatvip
· 15h ago
Is there really anyone who can understand this Singapore trap?
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GateUser-1e645fdcvip
· 15h ago
This is the Fifth City... Everyone participate more in the Fifth City.
View OriginalReply0
UncleWhalevip
· 15h ago
This is about the only advantage Singapore has.
View OriginalReply0
BottomMisservip
· 15h ago
Ask is Singapore's issuance, secure!
View OriginalReply0
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