As we race towards the end of January, the Crypto market is in in full swing, geopolitics and energy policy are once again at the forefront of international concerns and we at DLT Solutions wanted to update you on a couple of the exciting things we are working on, as well as taking a look back on a couple of high points from 2024.
Many successful projects in the Blockchain / Web3 space have used foundations in Switzerland, Cayman Islands, Jersey, Seychelles, and Panama to structure their projects. Ethereum, which recently celebrated its 10 year anniversary in Zug, was one of the first to utilise a Swiss foundation. A number of other foundations followed suit. Market trends and the hive minded tendency of web3 communities have subsequently created a tendency to go to a foundation as the parent vehicle of choice for a DAO wrapper / governance mechanism.
The BVI, unlike prevailing foundation jurisdictions, provides regulatory certainty for token launches. Consequently, a great number of blockchain projects have used BVI companies as their foundation’s subsidiary vehicles of choice for successful token launches. This said, there is a cost of unnecessary multi-jurisdictional aspect of the go-to structures currently used by many projects. Mitigating that structuring cost and risk through a single jurisdiction solution, while improving regulatory certainty and speed to market, are key factors that we at DLT Solutions have been thinking long and hard about. We believe that the BVI company limited by guarantee offers that single jurisdiction vehicle solution to token offerings and community management.
See more information on CLBG’s here
Congratulations to DLT’s Barbados based Partner Tara Frater, who in her role as Principal of FT Legal Attorneys in Barbados. recently helped Tabit Insurance obtain a Class 2 insurer licensed by the Barbados Financial Services Commission (FSC). Tabit is an innovative re/insurer focused on providing insurance and alternative risk financing solutions to the digital asset sector. With a focus on digital assets and other emerging sectors, Tabit plans to offer a range of insurance products that address the unique risks of the blockchain ecosystem.
We anticipate further moves from successful blockchain projects and entrepreneurs into the TradFi space.
At the back end of last year DLT Solutions was proud to play an integral role in the launch of Uranium.io, a new decentralized marketplace for trading physical uranium, which is now live on the Tezos blockchain. Lodewijk Van Setten of Trilitech and DLT Solutions worked for two years with his colleagues to put this groundbreaking project together. Supported by leading uranium trading company Curzon Uranium, and Archax, the first FCA registered crypto exchange in the UK, the Uranium.io dApp enables users to directly invest in uranium, which was not possible before.
Built on Etherlink, an EVM-compatible, non-custodial L2 blockchain powered by Tezos, the marketplace provides a seamless and secure user flow to purchase tokenized physical uranium (U3O8, also known as “yellowcake”) stored at a regulated depository owned and operated by Cameco, a global leader in uranium storage. The user experience of the dApp has been carefully designed to facilitate an easy on-ramping to uranium trading for users of all backgrounds.
Arthur Breitman, Co-Founder of Tezos, highlighted the significance of Uranium.io, stating:
“Real-world assets on-chain are compelling when they meaningfully reduce friction or enable new economic arrangements. The launch of Uranium.io on Tezos is a perfect example—transforming a market previously restricted by massive lot sizes and OTC overhead into something accessible and composable. This is particularly exciting as nuclear power is experiencing a revival.”
The blockchain powered market infra-structure solution represents a paradigm shift in how uranium can be bought and sold, paving the way for broader participation in this critical asset class. By combining blockchain technology with institutional-grade infrastructure, Uranium.io offers retail investors an unprecedented opportunity to participate in the uranium market—and by extension, the AI and energy sectors.
A powerful blockchain use case !
The term ‘Decentralized Autonomous Organization’ or ‘DAO’ refers to a group that is organized around a common purpose via blockchain powered voting and decision-making. The DAO governance operates through DAO tokens that entitle the tokenholder to vote on DAO matters in accordance with the DAO framework.
Hector DAO was created in 2021 for the purpose of managing crypto-asset investments through blockchain based operations. During 2023, Hector DAO suffered considerable financial losses to its treasury assets due to volatility of the crypto markets, in response to which the DAO tokenholders voted to approve the voluntary liquidation and distribution of Hector DAO’s treasury assets. During the liquidation process, in January 2024, Hector lost a further $2.7 million worth of distributable DAO treasury assets after it suffered a hack, prompting the DAO liquidation committee to seek judicial protection for the treasury assets and apply to the courts in the British Virgin Islands to appoint receivers.
The BVI court responded swiftly and pragmatically, and on 9 April 2024, issued a final receivership order appointing the Receivers on a full and final basis. Under the terms of the order, the Receivers were granted extensive powers over the treasury assets and the operations of Hector DAO, including the authority to take and retain possession and control of the wallet holding the assets, investigate antecedent transactions affecting Hector DAO, and enter into transactions on behalf of Hector DAO.
The conceptual difficulty that the BVI court had to overcome is that a DAO is not universally recognised as having a particular legal form or status. Different jurisdictions may treat DAOs in very different ways. It is therefore very often not clear what the legal position is of the DAO and the DAO tokenholders. The decision of the BVI court to grant the receivership, therefore, sets an important and helpful precedent by acknowledging that DAOs, despite their decentralized and autonomous structures, could be treated as debtors in an insolvency or asset administration context. A US bankruptcy court subsequently followed suit and recognised that Hector DAO could be the subject of an order under Chapter 15 of the US Bankruptcy Code, even though a DAO lacks a formal legal entity status, such as incorporation, that is required under the US Bankruptcy Code to be recognized as a debtor eligible for bankruptcy protection.
The decisions by the BVI court and the US bankruptcy court in the Hector DAO matter underscores the judiciary’s role in purposefully interpreting business and commercial laws in the context of novel technologies that permit businesses to be organised differently from traditional corporate structures. The BVI court did not shy away from this responsibility, which confirms the reliability and adaptability of the BVI as a jurisdiction for novel business structures and formations.