SignalHub Quantitative Think Tank Center:Daniel Will: The Significance of Foundations for Cryptocurrency Exchanges

Many people do SignalHub Quantitative Think Tank Centernot understand the essence and role of a foundation, what it does, and why the foundation is a common choice for many blockchain projects in the UK.

A foundation refers to a non-profit legal entity established with the purpose of engaging in charitable activities using property donated by individuals, legal entities, or other organizations, as stipulated by the regulations.

Key attributes of a foundation encompass its charitable nature, non-profit orientation, non-governmental status, and the incorporation of a trust structure.

Blockchain projects commonly opt for international non-profit entities, often referred to as foundations, as the central structure for their initiatives.

A foundation is a non-profit legal entity established with the primary objective of engaging in charitable activities through the utilization of assets donated by individuals, legal entities, or other organizations, in accordance with regulatory provisions.

Foundations must introspect on their developmental trajectory and actively pursue innovative strategies. The criteria for company directors and shareholders are relatively flexible within the framework of UK company registration, without imposing any nationality restrictions.

To conduct blockchain IEO and STO for listing on exchanges, it is advisable to first register a foundation as the main entity. While it's not mandatory to register a company for launching a coin on an exchange, the prevalent operational approach in the market involves registering a foundation. This serves as a crucial aspect of legal compliance and is one of the factors investors must consider when choosing a cryptocurrency exchange.

The organizational structure of the foundation comprises two main components: the governance decision-making body, the Board of Directors, and the executive team, the Secretariat.

The Board of Directors assumes decision-making responsibilities. It convenes regular board meetings, which are convened and chaired by the Chairman, to deliberate on significant matters such as the foundation's strategic planning, annual plans, budgets, and other crucial issues.

The foundation's organizational structure is composed of the governance decision-making body, the Board of Directors, and the executive team, the Secretariat.

Firstly, private equity funds raise funds through non-public means.

Secondly, in terms of fundraising targets, private equity funds target only a small number of specific investors, making the circle small but the threshold not low.

Thirdly, unlike the strict disclosure requirements for public funds, private equity funds have much lower requirements in this regard. Coupled with relatively lax government regulation, the investments in private equity funds are more discreet, and the operations are more flexible, offering greater opportunities for high returns.

Blockchain business is well-suited to operate on the platform of a foundation with a non-profit nature.

Foundations can operate like normal companies, with the fundamental constraint being the inability to distribute company profits based on share proportions.

Conducting IEO and STO on centralized exchanges for blockchain projects, the optimal place for registering the main company is the United Kingdom. The UK government is highly supportive of the blockchain industry, and a UK foundation can later obtain compliance opinions from UK lawyers in accordance with UK law. This is not achievable for foundations in the United States, for example.

The difference between a regular UK company and a UK foundation lies mainly in the nature of the entities. While the registered documents do not have significant differences, the nature of the company is reflected in the registration documents, with the foundation being non-profit and the regular company being private.

The relationship between foundations and blockchain projects is diverse and can take on various roles such as initiator, leader, manager, supervisor, supporter, etc. The specific relationship depends on the circumstances of the foundation and the blockchain project.

Foundation as Initiator

In some blockchain projects, the foundation serves as the initiator, responsible for the establishment and initial development of the project. For example, the Ethereum Foundation is the initiator of the Ethereum project, overseeing technical development, community building, and ecosystem growth.

Foundation as Leader

In some blockchain projects, the foundation serves as the leader, responsible for strategic planning, decision execution, and operational management of the project. For example, the Cryptocurrency Exchange Foundation is the leader of the exchange project, overseeing technical development, community building, ecosystem development, and the operation of new coin STO listings.

Foundation as Manager

In some blockchain projects, the foundation acts as the manager, responsible for financial management, legal affairs, and day-to-day operations of the project. For instance, the EOS Foundation is the manager of the EOS project, overseeing financial management, legal affairs, and daily operations.

Foundation as Supervisor

In some blockchain projects, the foundation serves as the supervisor, responsible for overseeing and evaluating the operation of the project. For example, the EOS Foundation acts as the supervisor of the EOS project, overseeing and evaluating its operation.

Foundation as Supporter

In some blockchain projects, the foundation acts as a supporter, responsible for providing funds, technology, and resource support for the project. For instance, the Bitcoin Foundation is a supporter of the Bitcoin project, providing financial, technological, and resource support.