Web3 Enterprises Going Global: Global Compliance Layout and Risk Isolation Strategies

In the wave of globalization, Web3 projects are moving towards the international stage at an unprecedented speed. However, the uncertainty of domestic policies and the ambiguity of regulatory attitudes have forced many Web3 companies to turn overseas or seek breakthroughs within limited Compliance frameworks. By closely monitoring the policy trends of various countries and reasonably constructing corporate Compliance frameworks, the Web3 industry may still find suitable development models.

Purpose of Enterprises Going Abroad

Market Opportunities

The global market provides Web3 projects with a broader user base and growth potential. 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 loose and friendly regulatory environments, providing greater flexibility and security for the operation and development of Web3 projects. In contrast, strict regulations in certain countries may restrict the development of projects.

Talent Acquisition

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

Funds and Investment

Going abroad allows Web3 projects to reach more potential investors and sources of funding. Especially in regions where venture capital and cryptocurrency investments are active, projects find it easier to secure financial support, propelling their rapid development.

industrial cluster effect

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

Risk Diversification

Conducting business in multiple countries can diversify risks and avoid significant impacts on projects due to economic, political, or regulatory changes in a single market, thereby enhancing the project's risk resistance capabilities.

Compliance and Risk Isolation

Compliance policies of various countries and regions

Hong Kong

Starting from 2023, Hong Kong implemented a licensing system for Virtual Asset Service Providers (VASP), requiring all Virtual Asset Trading Platforms (VATP) to obtain permission from the Hong Kong Securities and Futures Commission (SFC). As of January 2025, the SFC has issued operating licenses to multiple platforms, 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 businesses. Certain trading platforms' compliance arrangements in Singapore demonstrate their regulatory-friendly adaptation, such as obtaining preliminary approval and full licensing from MAS. 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 Markets in Crypto-Assets Regulation (MiCA) will come into effect at the end of 2024, standardizing the regulatory framework for crypto assets. MiCA mandates that crypto asset service providers register and comply with standards for transparency, liquidity, and consumer protection.

In the Asia-Pacific region, Japan requires virtual asset service providers to obtain a license from the Financial Services Agency (FSA), while Australia must register as a digital currency exchange service provider, regulated by the Australian Transaction Reports and Analysis Centre (AUSTRAC). In North America, U.S. regulators have strict oversight of crypto assets but are actively communicating with the industry to seek a clear framework.

Risk Isolation

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

Main strategies include:

1. Establish independent subsidiaries in different countries or regions, with each subsidiary acting as an independent legal entity responsible for the business operations in specific markets.

2. 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 of operating entities.

3. Clearly define the rights and obligations between entities through contracts and agreements, ensuring that risks are effectively isolated at a legal level.

By establishing a reasonable enterprise architecture isolation mechanism, Web3 companies can flexibly respond to regulatory requirements and risk challenges in different markets, ensuring the safety of core business and assets while maintaining the stability of global operations.

Major Destinations for Chinese Enterprises Going Abroad

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 lenient, making it easier for startups to quickly launch their businesses. In recent years, the Hong Kong government has actively promoted the development of blockchain technology, creating favorable conditions for the development of Web3 companies through policy incentives and support measures.

Singapore

Singapore is a leading fintech hub in Asia, boasting an advanced technological ecosystem that attracts numerous Web3-related companies. The Singapore government maintains an open attitude towards blockchain and Web3 technologies and has established clear regulatory policies to assist companies in rapidly developing under compliance. Singapore's tax system is relatively favorable, reducing operational costs for Web3 companies and enhancing their appeal.

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 strict privacy protection policies to ensure the safety of company and shareholder information, making it very suitable for privacy-focused Web3 projects. The local legal system is flexible and provides significant tax advantages, making it an ideal choice for offshore registration.

The Structure of Offshore Architecture

The underlying logic of the global compliance layout is to establish different entities and build a regional compliance framework, leveraging the unique advantages of each region through shareholding or substantive control. Enterprises can flexibly construct a multi-level and multi-ecosystem corporate strategy system, including single entity structures, multi-entity structures, and parallel structures, according to the needs of different stages of development, to adapt to the demands of various scenarios and stages.

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. However, as the business expands and operations become more complex, a single-layer structure may not meet the global market's Compliance requirements.

Multi-entity architecture

Suitable for 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 is suitable for enterprises that have entered the expansion stage and need to cope with multi-national regulatory environments and diversified business demands.

Parallel Architecture

Applicable to 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. This design enhances management clarity and enables higher flexibility and stability in global Compliance layout.

Architecture Advantage Analysis

Single Entity Architecture

Enterprises can fully leverage the policies and regulatory advantages of their chosen jurisdiction to achieve rapid compliance and operation. For example, choosing Singapore as a registered location allows for the benefits of relatively relaxed financing laws and the technology cluster effect; selecting BVI enables enjoying high levels of commercial confidentiality protection and a low tax environment.

Multi-Entity Architecture

It is possible to organically combine regulatory advantages from different regions by establishing subsidiaries or affiliated companies globally, achieving optimization of compliance and operations. For example, setting up a BVI holding company that controls a Hong Kong financial company, which in turn controls domestic operating companies, can optimize the global holding structure and protect core assets.

Parallel Architecture

High flexibility and risk isolation capabilities, especially suitable for group-based, diversified businesses with 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 close connections and synergy effects through equity control or business integration.

Tax Advantages of Architecture

Single Entity Architecture

Hong Kong

• Corporate Income Tax (Profit Tax) 8.25%-16.5% (first HKD 2 million profit taxed at half rate)
• No capital gains tax, value-added tax
• Signed tax agreements with more than 50 countries
• Free exchange of foreign currencies, convenient for listing and financing.

Singapore

• Corporate Income Tax 17%
• Tax exemption for the first three years
• Establish bilateral tax agreements with over 100 countries, conducive to cross-border tax avoidance.

BVI

• 0 corporate income tax, 0 value-added tax, 0 capital gains tax
• The company registration process is extremely simple, and shareholder information is highly confidential.

Multi-Entity Architecture

Using a multi-entity structure can enable more effective tax planning, leveraging the advantages of low tax rates and confidentiality of offshore companies to reduce the overall tax burden on the enterprise while protecting corporate information and dispersing the risks of the parent company.

Top Level: High Confidentiality + Low Tax Rate + Free Capital Flow

• Registered location: Cayman Islands, British Virgin Islands (BVI) and other offshore financial centers
• Function: Shareholder and beneficiary information is protected by law, mitigating single market risks.

Operations layer: Connect top-level investors with bottom-level operating entities + Enhance investment return rate + Profit reserve

• Registration location selection: Hong Kong/Singapore (Trade Compliance), Ireland/Netherlands (EU Market), Dubai (Middle East Market)
• Function: Sign a Double Taxation Treaty (DTT) with the target investment to enhance overall investment returns.

Actual operating company: business implementation + direct/indirect holding

• Registration Location: Local Company in Target Market
• Functions: On-site production, marketing, localization services, meeting local operation requirements

Case Analysis

Cross-border E-commerce Architecture Design

• Holding layer: BVI company (confidentiality) + Hong Kong company (financing and supply chain coordination)
• Operating layer: Hong Kong company (offshore trade tax exemption) + Dubai company (Middle East warehousing and logistics)
• Entity Level: Mainland China Factories (Export Tax Refund) + Brazilian Subsidiary (Localized Sales)

Xiaomi Group Architecture Design

• Holding Layer: Xiaomi Group (Cayman)
• Operations Layer: Xiaomi Hong Kong (Global Procurement + Profit Retention)
• Entity layer: Xiaomi Communication (direct-to-consumer), Xiaomi Technology and Xiaomi Technology subsidiaries

Summary

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

In architectural design, enterprises can flexibly choose single entity, multiple entities, or parallel architectures based on their own scale and goals to ensure Compliance and isolate potential risks. At the same time, by leveraging policy advantages in various regions, enterprises can optimize capital flow through multiple entity architectures, significantly reducing tax burdens.

Looking ahead, with the globalization of Web3 projects, companies are shifting from a single structure to a hybrid structure to achieve risk isolation, fund circulation, strategic collaboration, and tax planning. By establishing multiple entities in different jurisdictions, companies can effectively isolate market risks and ensure Compliance, while optimizing capital flow, reducing tax burdens, and integrating global resources to enhance innovation capabilities and market competitiveness.