December 12, 2023


The Development Company

Development companies (DevCos) are the command centres of early stage Web3 projects. While some sort of decentralisation is often the eventual goal, it is inevitable that almost every project starts with a centralised founding team which drives the development of the project.

The DevCo is often a private company limited by shares incorporated in an appropriate jurisdiction. Almost every jurisdiction in the world offers a similar corporate structure (sometimes under different names like ‘corporation’, ‘business company’, ‘SARL’ etc).

Note that the DevCo often does not issue any tokens.

Does every project need a DevCo?

No – but it is often strongly recommended that founders incorporate a DevCo to undertake their projects. The alternative is to pursue the project’s development in the founders and contributors’ personal capacities which means that the developers of the project have to hire contractors and employees in their own names, fund the project’s expenses out of their own assets and most crucially, bear personal liability if anything goes wrong.

Having a DevCo also allows the project team to undertake corporate activity such as entering into fundraising transactions which is often part of a project’s plans.

What does a DevCo do?

As the entity developing the Web3 project, the DevCo fulfils the following non-exhaustive list of functions:

·         Employ or contract other persons to work on the project

·         Develop and hold the project’s valuable intellectual property

·         Enter into investment agreements with investors for equity or tokens*

·         Contract with other third parties to fulfil necessary functions in connection with the project

Whenever the founding team does anything for the project, they are effectively doing this through the DevCo.

What are the key considerations when deciding where to incorporate DevCo?

The answer to this question is perhaps often unnecessarily shrouded in mystery. With all manners of exotic offshore jurisdictions shilled by service providers depending on their own commercial interests, it is often difficult for a Web3 founder to understand what are the drivers between structuring decisions.

The answer can be simplified as operability, business environment and tax. Now this means little in a vacuum so we will now go through some common considerations.


Whether or not the founders intend to set up a bank account for the DevCo is a key consideration. Banking facilities are often necessary when the expenses and liabilities of DevCo cannot be fully settled on chain and some bills still have to be paid in fiat.

If banking is necessary, it is often advisable for DevCo to be situated within a jurisdiction which has established global banking infrastructure and is willing to set up accounts for blockchain development companies. Common options if banking is necessary are Delaware, England, Hong Kong and Singapore. Dubai and Abu Dhabi are also reasonable options if the founding team is based in or intends to move to the UAE.

Location of founding team / stakeholders

The founding team’s location is also relevant. All things being equal, it would be far easier for a team based in Singapore to operate an entity out of Singapore rather than an entity in Delaware for instance since the founders can more easily navigate local regulatory requirements, business landscape (e.g. setting up bank accounts, fiat rails etc) and operating matters.

The location and/or comfort of key investors is also a driver. If the project is looking to fundraise primarily from the United States for example, certain funds may be more comfortable investing into structures they are familiar with rather than more exotic jurisdictions.


Taxation is another key consideration and the options can broadly be split into three categories, (1) the zero tax offshore jurisdictions and (2) low income tax and zero capital gains tax jurisdictions and (3) low income tax and capital gains tax jurisdictions.

Jurisdictions in category 1 tend to be offshore islands like the British Virgin Islands, Cayman Islands, Panama, Seychelles etc. While seemingly attractive, the downside of incorporating a DevCo in these jurisdictions is the difficulty of setting up a bank account and potentially less operability.

Those in category 2 are your Asian financial hubs – namely Singapore and Hong Kong. Both levy a corporation tax at 17% and 16.5% respectively. Crucially, capital gains are not taxed in these jurisdictions.

Finally in category 3 you have jurisdictions where income tax is reasonably low and capital gains are taxable (although sometimes subject to certain reliefs).

Founders should note that corporate tax rates are often less relevant because most DevCos do not make a profit and most of a Web3 team’s gains are earned via token appreciation. To the extent the DevCo is profit-making, it is also often the case that simply incorporating in a zero-tax jurisdiction will not allow the project to avoid all taxes if the founders own a significant percentage of the company and are resident in a jurisdiction with foreign controlled corporation rules.

Founders are recommended to seek tax advice if necessary.

Regulatory environment

DevCo is a company that develops blockchain software and is thus often considered ‘low-risk’ when it comes to the application of complex securities laws which plague the Web3 industry. However, it is worth noting that the United States is particularly hostile towards Web3 companies and there are intimations that the courts might impute developer liability meaning that individuals may be found responsible if a protocol is found liable for criminal activity such as money laundering.

Securities laws aside – certain types of projects might be more ‘at-risk’ than others. For instance, gambling laws in Hong Kong and Singapore are notoriously strict and it may be unwise to incorporate a DevCo building an online casino in either of these jurisdictions.


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Development companies (DevCos) are the command centres of early stage Web3 projects. While some sort of decentralisation is often the eventual goal, it is inevitable that almost every project starts with a centralised founding team which drives the development of the project.

December 12, 2023

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