The foundation for crypto and token projects
The foundation has become the emblematic structure of major token projects: many protocols are backed by a Swiss foundation. Yet it is also a tool frequently chosen for the wrong reasons, with expectations that do not match what a foundation really is. Understanding when it makes sense — and when it does not — avoids building a rigid structure that is unsuited to its purpose. Here is the overall picture.
What a Swiss foundation really is
A foundation is a pool of assets dedicated to a purpose. It has no members and no owners: whoever establishes it contributes assets to a defined end and, from that moment on, loses proprietary control over those assets, which are bound to the statutory purpose. It is governed by a foundation board, required to pursue the purpose rather than the interest of a “shareholder”.
This is the point most often missed: a foundation has no owners. Anyone looking for a structure to retain control and distribute the proceeds to themselves has a company in mind, not a foundation.
Why token projects choose the foundation
Despite — or precisely because of — these features, a foundation can be well suited to a token ecosystem for specific reasons.
- Neutrality and absence of owners: a protocol that wants to present itself as shared infrastructure, rather than the property of a company, finds a coherent form in the foundation. No one “owns” the foundation.
- Stable purpose: the assets are bound to the development and promotion of the protocol or ecosystem, with continuity over time.
- Structured governance: the foundation board operates within a defined purpose and, for classic foundations, under supervision.
- Separation: the foundation can hold and manage the assets dedicated to the ecosystem (for example the token endowment), separating them from the operating companies.
The limits to know beforehand
The foundation carries constraints that must be accepted knowingly.
- Irrevocability of the dedication: the contributed assets are bound to the purpose; you cannot “take them back”.
- No distributions to founders: the foundation is not a vehicle for channelling profits to those who set it up.
- Rigidity of the purpose: changing the purpose is possible only within narrow limits and through formal procedures.
- Costs and obligations: initial endowment, governing bodies, any audit and — for many foundations — supervision entail structure and ongoing obligations.
If the project needs proprietary flexibility, needs to distribute value to its promoters or to change direction nimbly, the foundation is the wrong structure.
Not always a foundation: the alternatives
Many token projects do not need a foundation: a corporation (AG or GmbH), possibly combined with an association, can serve better when control, flexibility and genuine operational activity are required. Often the solution is architectural: a foundation for the neutrality of the ecosystem and the custody of the endowment, and operating companies for development and services. The choice depends on the real purpose, not on imitating other projects.
Governance and treatment of the assets
Where the foundation makes sense, the issues to set up are: composition and powers of the board, conflict-of-interest rules, management and custody of the token endowment, accounting and tax treatment of the assets and transactions, and — where the activity requires it — anti-money-laundering and regulatory profile. A poorly governed foundation is a reputational risk for the entire ecosystem it represents.
The correct sequence
First you define the real purpose and who should retain control and flexibility; then you choose between foundation, company or a mixed architecture; next you set up governance, assets and endowment; finally you address the accounting, tax and regulatory aspects. Setting up a foundation because “everyone does it” is the mistake you pay for with a rigid structure unsuited to its purpose.
How SIH ONE approaches the topic
SIH ONE handles structuring and advice: analysis of the purpose and choice of form (foundation, company, mixed architecture), design of governance and treatment of the token endowment, coordination of the accounting and tax aspects. Where activities subject to authorisation or regulatory profiles are involved, regulated activities are handled by authorised partners. The goal is a structure coherent with the project’s purpose, not copied from others.
This content is informational and does not constitute legal, tax or regulatory advice. Every structure must be verified in the specific case.
Are you considering a foundation for your crypto project? Let’s talk: we choose the right form and set up governance and assets, with authorised partners where needed.