The Challenge
A Web3 and blockchain development company was established in Japan, but the founders faced a series of complex challenges as they prepared to scale:
- Investment & Fundraising: Japan’s regulatory environment for crypto-related fundraising was restrictive, limiting investor appetite.
- Product Development: The company needed a stable jurisdiction to run global blockchain projects for clients.
- Founders’ Holding Structure: There was no clear vehicle to consolidate ownership, protect IP, and manage governance.
- Token Issuance: The team wanted to launch a native token, but Japanese regulation posed compliance risks.
- Gaming & Web3 Products: They planned to release blockchain-based gaming applications, requiring regulatory certainty and credibility with users and partners.
Without a global structure, they risked investor hesitancy, regulatory exposure, and operational inefficiencies.
Our Solution
1Financial designed a bespoke, multi-layered structure:
- Holding Company (BVI): We established a BVI holding company to consolidate founder equity, protect intellectual property, and serve as the parent entity for future investments. BVI’s corporate governance flexibility provided a secure base without heavy compliance costs.
- Fundraising & Investor Vehicle (Cayman Islands): For token sales and equity fundraising, we set up a Cayman Islands entity. Cayman’s globally recognised regulatory framework for investment funds reassured institutional and crypto investors.
- Token Issuance & Treasury (Seychelles): To handle token creation, distribution, and treasury management, we utilised Seychelles due to its favourable treatment of digital assets and streamlined compliance requirements. This ensured the token could be issued legally while mitigating risk.
- Operational Subsidiary (UAE): A UAE Free Zone company was incorporated as the operational arm. It managed client-facing blockchain and gaming projects, with access to a zero-tax environment, strong infrastructure, and credibility as a global business hub. This entity also obtained crypto-related approvals where required.
- Japanese Entity: The original Japan entity was retained for local presence, but strategic operations and fundraising shifted to the international structure.
The Outcome
- Investor Confidence: Cayman Islands fundraising vehicle attracted investors who recognised the jurisdiction’s credibility and regulatory clarity.
- Tax Efficiency: By centralising ownership in BVI and operating from the UAE, the group avoided double taxation and significantly reduced the global effective tax rate.
- Token Success: Token issuance through Seychelles complied with international standards, enabling smooth listing and investor participation.
- Operational Strength: The UAE subsidiary provided a legitimate, tax-efficient base to deliver global projects, employ staff, and build gaming products.
- Founder Security: The holding structure protected founder equity, simplified governance, and positioned the group for future expansion or exit.
