Web3 Projects Going Global: Compliance Framework and Global Strategy

In the current wave of globalization, Web3 projects are rapidly moving onto the international stage, with Chinese enterprises becoming an undeniable force. However, the uncertainty of domestic industry policies, the lack of legal frameworks, and ambiguous regulatory attitudes pose challenges for the development of Web3 enterprises. Many practitioners are forced to turn overseas or seek breakthroughs within limited Compliance frameworks. Nevertheless, by closely monitoring policy trends and combining favorable policies from various countries, and reasonably constructing a Compliance framework for enterprises, the Web3 industry still hopes to find suitable development models.

Purpose of Enterprises Going Abroad

Market Opportunities

The global market provides a broader user base and growth potential for Web3 projects. Particularly in regions such as Asia and Europe, users have a higher acceptance of blockchain technology and cryptocurrencies, bringing more business opportunities and development space for projects.

Regulatory Environment

The regulatory policies for blockchain and cryptocurrencies vary significantly across different countries. Some countries, such as Singapore and Hong Kong, have relatively relaxed and friendly regulatory environments, providing greater flexibility and security for Web3 project operations. In contrast, strict regulations in certain countries may limit project development. Expanding to countries with more favorable legal environments can effectively reduce risks and ensure long-term stable operation of projects.

Talent Acquisition

Web3 is a technology-intensive field, attracting top developers and experts is crucial for project success. By going overseas, projects can seek and recruit outstanding talent globally, accelerating the innovation and development of technology and products.

Funds and Investment

Going overseas allows Web3 projects to reach more potential investors and sources of funding. Especially in regions where venture capital and cryptocurrency investments are active, such as the United States or Southeast Asia, projects are more likely to receive financial support, promoting rapid development.

industrial cluster effect

Different countries and regions have formed regional industrial clusters due to inherent advantages such as technology and policies, providing various foundational support for local Web3 enterprises.

Risk Diversification

Conducting business in multiple countries can diversify risks, avoiding significant impacts on projects due to economic, political, or regulatory changes in a single market, thereby enhancing risk resistance.

Compliance and Risk Isolation

When Web3 companies choose a destination for expansion, they must prioritize the local regulatory framework to ensure legal compliance.

Compliance policies of various countries and regions

Hong Kong

Since 2023, Hong Kong has implemented a licensing system for Virtual Asset Service Providers (VASP), requiring all virtual asset trading platforms to obtain permission from the Hong Kong Securities and Futures Commission. As of January 2025, 7 platforms have obtained operating licenses. Since 2020, Hong Kong has officially licensed 10 exchanges, showing a cautious approach to opening up the virtual asset industry. Licensing requirements include strict KYC processes, asset protection, and cybersecurity measures, aimed at protecting investors and preventing money laundering risks.

Singapore

The Monetary Authority of Singapore allows fintech companies to test innovative products in a controlled environment through a regulatory sandbox, providing regulatory support for enterprises. A trading platform's compliance layout in Singapore demonstrates its regulatory-friendly adaptation: it received preliminary approval in 2022 and further obtained a full license in 2023. This indicates that Singapore has become a hub for Web3 companies in the Asia-Pacific region.

Other Regions: Europe, Asia-Pacific, and North America

The EU's "Regulation on Crypto-Assets" will come into effect at the end of 2024, standardizing the regulatory framework for crypto assets. In the Asia-Pacific region, Japan requires virtual asset service providers to obtain a license from the Financial Services Agency, while Australia must register as a digital currency exchange service provider. In North America, the U.S. has relatively strict regulations on crypto assets, but some companies are actively communicating with regulatory agencies to seek a clear framework.

Risk Isolation

The risk isolation mechanism is an important component in building a compliance framework for cross-border operations of Web3 projects. Its core objective is to ensure that risks from different business sectors or regions do not infect each other through reasonable design of the corporate architecture, thereby protecting the overall stability and continuous operational capability of the enterprise.

Independent subsidiaries can be established in different countries or regions, with each subsidiary acting as an independent legal entity responsible for specific market operations. This can limit legal, financial, and operational risks to specific entities, preventing the spread of risks to the entire corporate group.

Place core assets (such as technology patents, intellectual property, brands, etc.) in a specific holding company or trust structure to protect them from the risks associated with operating entities. For example, a business can register core assets in a holding company in the British Virgin Islands or the Cayman Islands while placing high-risk operating businesses in subsidiaries in other regions.

Clearly define the rights and obligations between entities through contracts and agreements to ensure that risks are effectively isolated at the legal level. Enterprises can clearly delineate the business boundaries and responsibilities between entities through service agreements, licensing agreements, or financial transaction agreements.

Main Destinations for Chinese Enterprises Going Abroad

Hong Kong

Hong Kong, as an international financial center, has a mature financial infrastructure and a sound legal system, providing a stable operating environment for Web3 companies. Compared to other regions, Hong Kong has relatively lenient regulations for Web3 projects, making it easier for startups to quickly conduct business. In recent years, the Hong Kong government has actively promoted the development of blockchain technology, creating favorable conditions for Web3 companies through policy incentives and support measures.

Singapore

Singapore is a leading financial technology hub in Asia, boasting an advanced technological ecosystem that attracts a large number of Web3-related companies. The Singapore government has an open attitude towards blockchain and Web3 technologies and has established clear regulatory policies to help companies develop rapidly under compliance. Singapore's tax system is relatively favorable, reducing operational costs for Web3 companies and enhancing their attractiveness.

BVI (British Virgin Islands)

BVI is known for its fast and simple company registration process and lower registration fees, making it suitable for Web3 startups to set up quickly. BVI offers a strict privacy protection policy to safeguard the information of companies and shareholders, which is very suitable for privacy-focused Web3 projects. The local legal system is flexible and provides significant tax incentives, making it an ideal choice for offshore registration.

Construction of Overseas Architecture

The underlying logic of global compliance layout is to establish different entities to build a regional compliance framework, fully leveraging the unique advantages of each region through shareholding or substantial control. This approach transforms offshore companies from mere symbols of "regulatory evasion" or "tax havens" into a "strategic hub" for enterprises to construct a global compliance system and optimize the allocation of funds and resources through proper planning. Enterprises can flexibly construct a multi-level and multi-ecosystem corporate strategic system, such as single entity structures, multi-entity structures, and parallel structures according to the demands of different stages of development, to adapt to various scenarios and stage requirements.

Architecture Applicability

Single Entity Architecture

Suitable for startups or small companies that wish to quickly validate their business model and focus on a single market. The structure is simple, management costs are low, and it is easy to start and operate quickly. As the scale of the business expands and operations become more complex, the shortcomings of a single-layer structure gradually become apparent, which may not meet global market Compliance requirements and make it difficult to achieve efficient resource allocation and effective risk isolation.

Multi-entity architecture

Applicable to enterprises with long business lines, complex sectors, and diverse equity structures. By establishing subsidiaries or affiliated companies in different jurisdictions, it can achieve risk isolation, tax optimization, and market adaptation. It supports enterprises in reallocating resources among different markets and enhances global competitiveness through a regional compliance framework. Suitable for enterprises that have entered the expansion stage and need to cope with multi-national regulatory environments and diversified business demands.

Parallel Architecture

A more complex design, suitable for enterprises that need to operate multiple business segments independently. By establishing multiple independent entities, it ensures that each business segment does not interfere with one another legally and financially. Through equity control or business integration, tight connections and synergies are maintained between the segments. This design enhances management clarity and achieves greater flexibility and stability in global compliance layouts, making it more suitable for enterprises with diversified businesses.

Architecture Advantage Analysis

Single Entity Architecture

Businesses can fully leverage the policy and regulatory advantages of their chosen jurisdiction to achieve rapid compliance and operations. For instance, choosing Singapore as a registration location allows them to benefit from its lenient financing legal regulations and support policies for tech companies. Opting for the BVI provides strict privacy protection and a low tax environment.

Multi-entity architecture

By organically combining regulatory advantages from different regions, we can establish subsidiaries or affiliated companies globally to achieve compliance and operational optimization. For example, establishing a BVI holding company to control a Hong Kong financial company, which in turn holds a domestic operating company, optimizes the global holding structure and protects core assets.

Parallel Architecture

With high flexibility and risk isolation capabilities, it is suitable for enterprises with group structures, diversified businesses, and complex equity needs. By establishing multiple independent entities, it ensures that various business segments do not interfere with each other legally and financially, while achieving synergies through equity control or business integration.

Tax Advantages of Architecture

When choosing the registration location for the architecture entity, attention must be paid to the regulatory policies, technology, and cost reduction and efficiency improvement needs of various regions, as well as the deep cooperation with local service providers and Compliance services, particularly noting the tax differences and preferential agreements in each region.

Single Entity Architecture

Applicable to businesses that are centralized, smaller in scale, or have a single target market.

Advantages: Simple structure, easy management and control. Disadvantages: May face a higher tax burden and lack risk isolation mechanisms.

Main options:

1. Hong Kong: Profit tax rate of 8.25% for the first 2 million, with dual tax exemption advantages for over 50 countries.
2. Singapore: 17% tax rate, extensive network of bilateral tax treaties.
3. BVI: A zero-tax paradise with strong confidentiality.

Multi-entity architecture

Tax planning can be conducted more effectively by establishing an intermediate holding company for investment in countries or regions with low tax rates.

Advantages: Can take advantage of tax incentives in various countries to reduce investment costs and support globalization. Disadvantages: Complex management, increased tax compliance costs.

Architecture Level:

1. Top Level: High confidentiality + low tax rates + free capital flow (such as Cayman Islands, BVI)
2. Operational Level: Connecting top-level investors with bottom-level operating entities + Enhancing investment return rates + Profit reserve (e.g., Hong Kong/Singapore, Ireland/Netherlands, Dubai)
3. Actual operating company: business implementation + direct/indirect holding (local companies in the target market)

Summary

Web3 projects going abroad have become a key strategy for Chinese enterprises to break through domestic regulatory restrictions and explore overseas markets. By going abroad, companies can not only avoid compliance risks but also seize international market opportunities, attract quality resources, and achieve risk diversification. Places like Hong Kong, Singapore, and the BVI have become ideal destinations due to their relaxed regulatory environment, tax incentives, and well-developed infrastructure.

Enterprises can flexibly choose between single entity, multiple entities, or parallel structures according to their scale and goals, ensuring Compliance and isolating potential risks. By leveraging the policy advantages of various regions, they can optimize capital flow through a multi-entity structure, significantly reducing tax burdens.

In the future, with the global development of Web3 projects, enterprises are shifting from a single structure to a hybrid structure to achieve risk isolation, capital flow, strategic collaboration, and tax planning. By establishing multiple entities in different jurisdictions, companies can effectively isolate market risk and ensure Compliance, while leveraging offshore companies and holding structures to optimize capital flow, reduce tax burdens, integrate global resources to enhance innovation capabilities and market competitiveness, and seize new opportunities brought by blockchain technology.