June 13, 2024
Enhancing Global Footprint: A Crypto Company’s Structuring Strategy
Introduction
The Client, a crypto company headquartered in Southeast Asia, engaged our advisory services to develop a global corporate structure. Currently operating under a single entity, this company has developed an on-chain private credit protocol that facilitates loans against securitised debt portfolios. The Client also enables reliable credit assessments while providing streamlined financial solutions.
Challenge
With a virtual asset element involved in facilitating loans to institutional borrowers in developing countries, asset protection and selection of the appropriate jurisdiction posed significant challenges. Another challenge was the segregation of assets in each entity to ensure limitation of liability and mitigation of risk.
Strategies, Tactics, and Solutions
Our advisory team conducted a thorough analysis of the company’s current operations and future objectives. Based on this analysis, we recommended three corporate structuring options to be adopted in accordance with the Client’s growth:
- Short-Term Structure:
- Entities: Holding Entity (HoldCo), Operational Entity (OpCo), and Marketplace Entity (MarketplaceCo).
- Recommendations:
A. HoldCo: The existing Singapore-based entity to oversee governance and strategic direction.
B. OpCo: Incorporation in South Asia for favourable employment and operational conditions.
C. MarketplaceCo: Incorporation in select offshore jurisdictions with regulatory regimes friendly to crypto.
- Mid-Term Structure:
- Entities: Addition of Intellectual Property Entity (IPCo) and Issuance Entity (IssuanceCo).
- Recommendations:
A. IPCo: Incorporation in Singapore to manage and license the company’s intellectual property.
B. IssuanceCo: Incorporation in crypto-friendly offshore jurisdictions for token issuance, mitigating associated risks and liabilities.
3. Long-Term Structure:
- Entities: Addition of a Reserve Entity (ReserveCo) for holding on to the reserves of the Client, along with a regulated Marketplace Entity (Regulated MarketplaceCo) to apply for an appropriate licence to enhance the client’s business from a regulatory standpoint and enhance Series A opportunities.
- Recommendations: Detailed relationships between all the eight (8) entities in the structure, along with the relationship with ReservceCo and Regulated MarketplaceCo, were provided.
Outcomes
Our proposed structure provided a clear roadmap for the company’s global expansion while addressing regulatory compliance, operational efficiency, and asset protection. By implementing the recommended structure, the company could enhance its investor returns, support economic growth, and promote financial inclusion in emerging markets. Our advice ensured that each entity operated independently, maintaining clear operational boundaries and minimising risk exposure.
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