Structuring Strategy: Dual Token Issuance

Introduction

• A blockchain-enabled platform for tokenising and monetising content in the media and entertainment industry sought advisory services to develop a global corporate structure. Currently operating with a single entity, the company aimed to navigate complex regulatory frameworks and support its expanding operations and strategic objectives.

Challenge

• Key challenges included regulatory compliance across multiple jurisdictions, asset protection, and mitigating risks associated with token issuance and cryptocurrency operations. Another significant challenge was the company’s two-token structure, i.e., the issuance of both governance and utility tokens.

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 stages:

1. Short-Term Structure:

• Entities: Holding Entity (HoldCo), Operational Entity (OpCo), Marketplace Entity (MarketplaceCo), Issuance Entity (IssuanceCo), and DAO Foundation. We also recommended optional entities such as the Reserve Entity (ReserveCo) and an entity for utility token issuance (Additional IssuanceCo).
• Recommendations:

1. 1. HoldCo: Incorporation in renowned jurisdictions for asset management and strategic control.
   2. OpCo: Incorporation in South Asia for favourable employment and operational conditions.
   3. MarketplaceCo: Incorporation in select offshore jurisdictions with regulatory regimes friendly to crypto.
   4. IssuanceCo: Incorporation in offshore crypto-friendly jurisdictions.
   5. DAO Foundation: Establishment in UAE or prominent offshore jurisdictions.
   6. ReserveCo: Optional entity to hold all unissued tokens in the jurisdiction of HoldCo or IssuanceCo.

1. Mid-Term Structure:

• Entities: Addition of Intellectual Property Entity (IPCo)
• Recommendations:

1. 1. IPCo: Incorporation in the jurisdiction of HoldCo to manage and license the company’s intellectual property.
   2. 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:

1. 1. TreasuryCo: Incorporation in tax-efficient jurisdictions depending on the country from which the funds would be incoming.
   2. Regulated MarketplaceCo: Incorporation in UAE to obtain necessary licences.

Outcomes

• Our proposed structure provided a clear roadmap for the company’s dual token structure while addressing regulatory compliance, operational efficiency, and asset protection. This structured approach ensures that each entity operates independently, maintaining clear operational boundaries and minimising risk exposure while supporting the client’s mission to revolutionise content monetisation in the media and entertainment industry.

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TLP Advisors is a dynamic and forward-thinking consulting, strategy and law firm specialising in providing cutting-edge solutions to our diverse clientele. With our roots deeply embedded in financial services, gaming, web3, and emerging tech, we offer unparalleled knowledge and support tailored to these rapidly evolving sectors’ unique challenges and opportunities.

TLP Advisors has consistently been the firm of choice for L1 chains, DeFi protocols, gaming companies, fintech and payment companies, foundations, funds, and investors. We have built a reputation for excellence through frequent collaborations with regulators, funds, and technology incubators. Our deep understanding of the intricate regulatory landscapes and industry dynamics allows us to provide strategic guidance and innovative solutions that empower our clients to navigate complex challenges and seize emerging opportunities.

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