In today's wave of globalization, Web3 projects are moving onto the international stage at an unprecedented speed, and Chinese enterprises are an undeniable force. However, uncertainties in industry policies, legal deficiencies, and ambiguous regulatory attitudes in China have made the development of Web3 enterprises hesitant. These factors collectively lead to compliance challenges for Web3 projects in domestic development, forcing many practitioners to turn to overseas ventures or seek breakthroughs within limited compliance frameworks. However, through closely monitoring policy trends and leveraging preferential policies from various countries, reasonably constructing a compliance framework, the Web3 industry may still find suitable development models.
The purpose of enterprises going global
(1) Market Opportunities
The global market provides Web3 projects with a broader user base and growth potential. Particularly in regions like Asia and Europe, users have a higher acceptance of blockchain technology and cryptocurrencies, bringing more business opportunities and development space to the projects.
(2) Regulatory Environment
Different countries have significantly different regulatory policies for blockchain and cryptocurrencies. Some countries, such as Singapore and Hong Kong, have relatively relaxed and friendly regulatory environments, providing greater flexibility and safety for the operation and development of Web3 projects. In contrast, strict regulations in certain countries may limit project development. In some countries, Web3 projects may face legal and compliance challenges. Going to countries with more friendly legal environments can effectively reduce these risks and ensure the long-term stable operation of the project.
(3) Talent Acquisition
Web3 is a technology-intensive field where attracting top developers and experts is crucial to the success of projects. By going global, projects can seek and recruit talent worldwide, accelerating technology and product innovation and development.
(4) Capital and Investment
Going global 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 easier to obtain financial support, driving their rapid development.
(5) Industrial Cluster Effect
Different countries and regions have formed various industrial clusters due to inherent advantages in technology and policy, creating regional supply chains that provide different foundational support for local Web3 enterprises.
(6) Risk Diversification
Conducting business in multiple countries can diversify risks, avoiding significant impacts on projects from economic, political, or regulatory changes in a single market, thus improving the project's risk resistance.
Compliance and Risk Isolation
Web3 enterprises must prioritize the local regulatory framework when choosing their destinations for going global to ensure legal and compliant operations.
(1) 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 (VATP) to obtain licenses from the Hong Kong Securities and Futures Commission (SFC). As of January 2025, the SFC has issued operational licenses to platforms such as PantherTrade and YAX, with a total of 7 licensed since mid-2024. Since 2020, Hong Kong has officially licensed 10 exchanges, including 4 in December 2024, demonstrating its cautious openness towards 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 (MAS) allows fintech companies to test innovative products in a controlled environment through a regulatory sandbox, providing regulatory support for enterprises. Coinbase's compliance layout in Singapore demonstrates its adaptability to a friendly regulatory environment: it received MAS's in-principle approval in 2022 and further obtained a full license (Major Payment Institution License) in 2023. This indicates that Singapore has become a hub for Web3 enterprises in the Asia-Pacific region, and Coinbase has set up its Asia-Pacific institutional business here, showing confidence in the local regulatory environment.
Other Regions: Europe, Asia-Pacific, and North America:
The EU's Markets in Crypto-Assets Regulation (MiCA) will come into effect at the end of 2024, unifying regulatory standards for crypto assets. MiCA requires crypto asset service providers to register and adhere to standards of transparency, liquidity, and consumer protection.
In the Asia-Pacific region, Japan requires virtual asset service providers to obtain licenses from the Financial Services Agency (FSA), while Australia requires registration as digital currency exchange service providers, regulated by the Australian Transaction Reports and Analysis Centre (AUSTRAC). In North America, the U.S. SEC has strict regulations regarding crypto assets, as seen with Binance and Coinbase facing lawsuits, but both are actively communicating with regulators to seek a clear framework.
(2) Risk Isolation
The risk isolation mechanism is an important component in building a compliance framework for Web3 projects in cross-border operations. Its core objective is to ensure that risks from different business segments or regions do not infect each other through reasonable design of enterprise architecture, thereby protecting the overall stability and sustainable operation capacity of the enterprise. In the globalized Web3 industry, due to significant differences in regulatory policies, legal environments, and market risks among different jurisdictions, the risk isolation mechanism is particularly critical.
For example, establishing independent subsidiaries in different countries or regions, with each subsidiary as an independent legal entity responsible for business operations in specific markets. This can limit legal, financial, and operational risks within specific entities, avoiding risk diffusion to the entire corporate group. Each entity operates independently and does not interfere with each other, even if a particular region faces regulatory changes or legal challenges, other entities can still operate normally. This design not only enhances the enterprise's risk resistance but also facilitates strategic adjustments based on specific market demands.
Placing core assets (such as technology patents, intellectual property, brands, etc.) in specific holding companies or trust structures to protect them from risks associated with operating entities. For example, companies can register core assets in holding companies in the British Virgin Islands (BVI) or the Cayman Islands while placing high-risk operational businesses in subsidiaries in other regions. Even if operating entities face litigation or financial difficulties, core assets can still be protected, ensuring the long-term development of the enterprise.
Clarifying the rights and obligations between entities through contracts and agreements, ensuring that risks are effectively isolated at the legal level. For example, enterprises can clearly delineate business boundaries and responsibilities among entities through service agreements, licensing agreements, or financial transaction agreements. This approach not only reduces the likelihood of risk transmission but also provides flexibility and transparency for enterprises in global compliance operations.
By reasonably establishing enterprise structure isolation mechanisms, Web3 enterprises can flexibly respond to regulatory requirements and risk challenges in different markets, ensuring the safety of core businesses and assets while maintaining global operational stability.
Main destinations for Chinese enterprises going global
(1) Hong Kong
As an international financial center, Hong Kong has a mature financial infrastructure and a sound legal system, providing a stable operating environment for Web3 companies. Compared to other regions, Hong Kong's regulation of Web3 projects is relatively loose, facilitating rapid business development for startups. In particular, the Hong Kong government has actively promoted the development of blockchain technology in recent years, creating favorable conditions for the development of Web3 companies through policy incentives and support measures.
(2) Singapore
Singapore is a leading fintech hub in Asia, featuring an advanced technology ecosystem that attracts numerous Web3-related enterprises. The Singapore government takes an open attitude towards blockchain and Web3 technology and has formulated 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 attractiveness.
(3) BVI (British Virgin Islands)
BVI is known for its fast and simple company registration process and low registration fees, making it suitable for Web3 startups to quickly establish. BVI offers strict privacy protection policies to safeguard company and shareholder information, making it ideal 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 the Going Global Structure
The underlying logic of global compliance layouts is to establish different entities, creating regional compliance frameworks that leverage the unique advantages of various regions through shareholding or substantial control. This approach transforms offshore companies from mere symbols of 'regulatory avoidance' or 'tax havens' into strategic hubs for enterprises to build global compliance systems and optimize capital and resource allocation through reasonable planning. Enterprises can flexibly construct multi-level and multi-ecosystem strategic systems such as single-entity, multi-entity, and parallel structures according to the needs of different development stages to meet the demands of various scenarios and stages.
(1) Structural Applicability
Regarding the applicability of the structure, different corporate structure designs can meet the goals of enterprises at different development stages and business needs.
(1) Single-Entity Structure
Single-entity structures are suitable for startups or small companies that wish to quickly validate business models and focus on a single market.
This structure is simple, has low management costs, and is conducive to quick initiation and operation. For example, a startup can register a single entity in Singapore to quickly enter the market and benefit from local tax incentive policies while avoiding complex multinational management burdens.
However, as enterprises grow in scale and complexity, the limitations of single-layer structures become evident. They may not meet global market compliance requirements, such as the differences in regulatory standards in different regions, and are also difficult to efficiently allocate resources and effectively isolate risks. When enterprises need to enter multiple markets simultaneously, a single entity may face bottlenecks in tax, legal, or operational aspects.
(2) Multi-Entity Structure
Multi-entity structures are suitable for enterprises with long business lines, complex sectors, and diverse equity structures.
By establishing subsidiaries or affiliated companies in different jurisdictions, multi-entity structures can achieve risk isolation, tax optimization, and market adaptability. For example, a technology company may establish a subsidiary in the EU to comply with GDPR (General Data Protection Regulation) requirements while setting up a holding company in the Cayman Islands to optimize its global tax structure. This structure distributes entities, controlling legal and financial risks within specific regions while enhancing operational flexibility globally. It supports resource allocation between different markets and strengthens global competitiveness through regional compliance frameworks.
Suitable for enterprises that have entered the expansion stage and need to respond to multi-country regulatory environments and diversified business demands. For example, certain leading exchanges have established subsidiaries in Southeast Asia, Europe, and North America, launching different versions of their apps to adapt to local consumer habits and legal requirements.
(3) Parallel Structure
The parallel structure is another more complex design, generally involving the direct combination of equity or business in multiple multi-entity structures, especially suitable for enterprises that need to operate multiple business segments independently.
Parallel structure ensures that each business segment operates independently in legal and financial terms by establishing multiple independent entities. For example, a group may operate manufacturing, retail, and financial services simultaneously, setting up independent legal entities for each segment through parallel structures to prevent risks in one segment from affecting others. However, through equity control or business integration, there will still be close connections and synergies between different segments. A Web3 company can independently operate technology development and business promotion in different regions, satisfying local compliance needs while optimizing global resource allocation.
This design not only enhances management clarity but also achieves higher flexibility and stability in global compliance layouts, making it more suitable for enterprises with diversified businesses.
(2) Structural Advantage Analysis
(1) Single-Entity Structure
The characteristic of the single-entity structure is that enterprises can fully utilize the policy and regulatory advantages of the chosen jurisdiction to achieve rapid compliance and operation. The regulatory environment in different regions provides unique opportunities for enterprises.
For example, if enterprises value financing or technology cluster effects, Singapore can be chosen as the registration location. Singapore has relatively relaxed financing laws and regulations, especially in capital markets and financial innovation. This provides Web3 enterprises with flexible financing channels, helping to raise funds quickly and promoting project development. Moreover, the Singapore government actively encourages the development of high-tech enterprises, providing various policy supports and funding incentives. Enterprises can leverage these policies to reduce R&D costs and accelerate technological innovation.
If enterprises place more emphasis on tax and shareholder privacy, BVI can be chosen as the place of registration. BVI is known for its strict privacy protection policies, making it particularly suitable for Web3 enterprises that prioritize information security and shareholder rights protection. Registering here offers high levels of business confidentiality protection while benefiting from simplified regulatory requirements and a low tax environment.
(2) Multi-Entity Structure
Case Study: China → Singapore → Domestic Company
The characteristics of multi-entity structures lie in their ability to organically combine regulatory advantages from different regions by establishing subsidiaries or affiliated companies globally to achieve optimization of compliance and operations.
For instance, establishing a BVI holding company that controls a Hong Kong financial company, which in turn controls domestic operating companies. The BVI company benefits from low tax rates and privacy protection, the Hong Kong holding company enjoys financial convenience and tax incentives in Hong Kong, and the operating company in China enjoys research-related subsidies and advantages in the tech industry, optimizing the global holding structure and protecting core assets.
Through a multi-entity structure, companies can not only flexibly allocate resources between different markets but also control legal and financial risks within specific regions, ensuring compliant operations globally.
(3) Parallel Structure
For example:
The regulatory characteristics of the parallel structure lie in its high flexibility and risk isolation capability, especially suitable for enterprises with group structures, diversified businesses, and complex equity needs.
For instance, by establishing multiple independent entities, the parallel structure ensures that each business segment operates independently in legal and financial aspects, preventing regulatory risks in one segment from affecting other businesses. A Web3 enterprise may independently operate technology development and business promotion in different regions, satisfying local compliance needs while optimizing global resource allocation.
Although each entity operates independently, through equity control or business integration, close connections and synergies can still be achieved among segments. A multinational company may establish a technology R&D center in Singapore and a Web3 service company in Hong Kong, with both collaborating through equity or business interactions to jointly promote technological innovation and market expansion.
The parallel structure not only enhances the flexibility and stability of enterprises in global compliance layouts but also provides a solid foundation for sustainable development in complex regulatory environments.
Tax Advantages of the Structure
When choosing the registration location for the structural entity, it is necessary to timely understand the regulatory policies of various places, the needs for technology and cost reduction, and the depth of cooperation with local service providers and compliance services, especially noting the tax distinctions and preferential agreements in different regions.
(1) Single-Entity Structure
Single-entity structure refers to companies making overseas investments or operations directly through a single offshore subsidiary, suitable for businesses with centralized operations, smaller scales, or single target markets.
Advantages: Simple structure, convenient management and control.
Disadvantages: May face relatively high tax burdens and lack risk isolation mechanisms.
1. Hong Kong: 8.25% tax rate on profits up to 2 million, with tax exemption benefits from over 50 countries.
Advantages: Corporate income tax (profit tax) of 8.25%-16.5% (half tax rate for the first 2 million HKD profit), no capital gains tax or value-added tax, signed tax agreements with over 50 countries, free currency exchange, and convenient financing for public listing;
2. Singapore: 17% tax rate, with a wide network of bilateral tax agreements
Advantages: Corporate income tax of 17%, tax exemption for the first three years, and establishment of bilateral tax agreements with over 100 countries, beneficial for cross-border tax avoidance;
3. BVI: zero tax haven, strong confidentiality
Advantages: 0 corporate income tax, 0 value-added tax, 0 capital gains tax, extremely simplified company registration process, strong confidentiality of shareholder information;
(2) Multi-Entity Structure
Using a multi-entity structure allows for more effective tax planning. Domestic companies can set up one or more intermediate holding companies in low-tax-rate countries or regions (typically Hong Kong, Singapore, BVI, or Cayman) to invest in target investment countries. By leveraging the advantages of offshore companies' low tax rates and confidentiality, companies can reduce their overall tax burden, protect corporate information, diversify parent company risks, and facilitate future equity restructuring, sales, or financing.
Advantages: Can utilize tax incentive policies in various countries to reduce investment costs, while supporting globalization layouts.
Disadvantages: Complex management, and tax compliance costs will rise.
1. Top Layer: High confidentiality + low tax rate + free flow of capital
Registration Location: Cayman Islands, British Virgin Islands (BVI), and other offshore financial centers
Functional Realization: Shareholder and beneficiary information is legally protected, avoiding risks from a single market (dispersing geopolitical impacts).
2. Operational Layer: Connect top-level investors with bottom-level operating entities + Enhance investment return + Profit reserves
Selection of Registration Location: Hong Kong/Singapore (trade compliance), Ireland/Netherlands (EU market), Dubai (Middle East market)
Functional Realization: Sign agreements with target investors to avoid double taxation, enhancing overall investment returns.
3. Actual operating companies: Business landing + direct/indirect control
Selection of Registration Location: Local companies in the target market
Functional Realization: On-site production, marketing, localized services to meet local operational requirements, choosing registration locations based on operational projects.
Case Study: Cross-border E-commerce
Architecture Design:
Holding Layer:BVI Company (confidentiality) + Hong Kong Company (financing and supply chain coordination)
Operational Layer: Hong Kong Company (offshore trade tax exemption) + Dubai Company (Middle East warehousing and logistics)
Entity Layer: Mainland China Factory (export tax rebate) + Brazil Subsidiary (localized sales)
Reinvesting in operational entities through a Hong Kong company controlled by a BVI company, achieving control over operating entity companies through a layered structure and VIE agreements.
BVI companies, as top-level holdings, enjoy dividend distributions to Hong Kong tax-free, and future equity transfers are exempt from capital gains tax, protecting founder privacy.
Case Study: Xiaomi Group
Architecture Design:
Holding Layer: Xiaomi Group (Cayman)
Operational Layer: Xiaomi Hong Kong (global procurement + profit retention)
Entity Layer: Xiaomi Communications (directly facing consumers), Xiaomi Technology, and Xiaomi Technology's subsidiaries
By holding Xiaomi Hong Kong Company through Xiaomi Group (Cayman) and reinvesting in entities such as Xiaomi Communications. Xiaomi Communications signs agreements with Xiaomi Technology and its registered shareholders to control legal documents and achieve control over Xiaomi Technology through VIE agreements, indirectly controlling Xiaomi Technology's subsidiaries.
Summary
In the context of globalization, going global has become a key strategy for Web3 projects to break domestic regulatory restrictions and expand into overseas markets. By going global, enterprises can not only effectively avoid compliance risks but also seize international market opportunities, attract quality resources, and achieve risk diversification. For instance, places like Hong Kong, Singapore, and BVI have become ideal destinations for Web3 enterprises due to their lenient regulatory environments, tax incentive policies, and complete infrastructure.
In architecture design, enterprises can flexibly choose single-entity, multi-entity, or parallel structures based on their scale and goals to ensure compliance and isolate potential risks. Meanwhile, leveraging policy advantages in various locations, enterprises can optimize capital flow through multi-entity structures, significantly reducing tax burdens.
Looking ahead, as Web3 projects develop globally, enterprises are shifting from single-entity structures to hybrid structures to achieve risk isolation, capital flow, strategic coordination, and tax planning. By establishing multiple entities in different jurisdictions, enterprises can effectively isolate market risks and ensure compliance while optimizing capital flow through offshore companies and holding structures, reducing tax burdens and integrating global resources to enhance innovation capabilities and market competitiveness, leveraging the new opportunities brought by the globalization of blockchain technology.
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Author: Crypto, Fat Meimei