Jurisdiction Arbitrage: Optimizing Entity Structure for Web3 Operations
The Executive Verdict
1. The Core Definition: The "Governance vs. Equity" Split
Without an entity, a DAO is a General Partnership (Unlimited personal liability for voters - see Ooki DAO). Wyoming DAO LLCs block this liability. Delaware C-Corps maximize capital formation.
Shield Diagram. Scenario A (No Entity): "Lawsuit" hits "Voters." Scenario B (Wyoming LLC): "Lawsuit" hits "LLC Wrapper," protecting voters.
2. Delaware C-Corp: The Capital Magnet
Advantages: QSBS Tax Exemptions (0% cap gains on $10M), Court of Chancery predictability, VC Mandates (No UBTI). Limitation: Designed to maximize shareholder value, not stakeholder utility. Risky for token issuance.
3. Wyoming DAO LLC: The Native Container
Advantages: Algorithm as Manager (Smart Contract governance), Waivable Fiduciary Duties. Banking Problem: Very hard to get fiat banking. Most use fintechs (Mercury/Brex) with friction.
4. The "Hybrid Bridge": The Advanced Architecture
Component A: DevCo (Delaware C-Corp) - Hires team, builds software, raises VC. Component B: Protocol Wrapper (Wyoming DAO/Cayman Foundation) - Deploys contracts, manages Treasury, issues token. DevCo services the Foundation.
Org Chart. Left: Shareholders -> Delaware DevCo -> Services -> Protocol. Right: Token Holders -> Wyoming DAO -> Controls -> Protocol. Center: The Smart Contracts.
5. The Offshore Question: BVI, Cayman, & Switzerland
Cayman Foundation: Ownerless, good for token issuance (Reg S). Swiss Association: High reputation, high cost ($100k+). BVI VASP: Cost-effective but rising substance rules. Rule: Don't issue tokens from a US C-Corp.
6. The Corporate Transparency Act (CTA): Anonymity is Dead
US entities must report Beneficial Owners (>25% control) to FinCEN. For a DAO, this likely means the Multi-Sig signers. "Anonymous DAO LLC" is a myth in the US.
7. Comparative Matrix: Selecting Your Vehicle
| Feature | Delaware C-Corp | Wyoming DAO LLC | Cayman Foundation |
|---|---|---|---|
| Primary Use | Raising Equity (VC) | On-Chain Governance | Token Issuance |
| Liability | High (Corporate Veil) | High (Statutory) | High (Separate Legal Personality) |
| Tax | Double Taxation (21%) | Pass-Through (K-1s) | Tax Neutral (0%) |
| Banking | Excellent | Difficult | Moderate (Offshore) |
| Anonymity | Low (CTA Applies) | Low (CTA Applies) | Medium (Register Private) |
8. Summary Checklist: The Structuring Sprint
1. Capital Needs (VC = Delaware). 2. Token Utility (Token = Offshore/Foundation). 3. Decentralization (Community Control = DAO LLC). 4. Banking (Fiat = US Entity). 5. Counsel (Cross-Border Specialist).
F.A.Q // Logical Clarification
Can a Delaware C-Corp convert to a DAO?
"Difficult. Triggers taxable events. Better to use Hybrid separation."
What is a Series LLC?
"One parent, infinite child cells. Segregates liability for sub-projects. Bankruptcy protection untested."
Can I live in NY and use a Cayman Foundation?
"Risky ("Mind and Management" tax nexus). Requires Economic Substance in the offshore jurisdiction."
Module ActionsCW-MA-2026
Institutional Context
"This module has been cross-referenced with Legal & Regulatory / Corporate Structuring standards for maximum operational reliability."