Foundations as vehicles and the supervisory authority

Why the foundation

The Swiss foundation under Articles 80 to 89a of the Civil Code is an independent pool of assets dedicated to a particular purpose. It has no members and no owners. Its board is bound by the deed of foundation, while a public authority supervises whether the assets are used in accordance with the purpose. Foundations with a national or international purpose fall under the Federal Foundation Supervisory Authority in Bern, while foundations with a local purpose are supervised by the cantons.¹ For a crypto project these features were attractive for several reasons. The absence of owners suited the ethos of an open protocol that was supposed to belong to its community. The dedication of the assets to a purpose protected the funds against sudden withdrawal by the founders. The non-profit form allowed the proceeds of a token sale to be presented as contributions to the development of a public good. Lawyers also pointed to favourable tax treatment and to the relative ease of raising funds compared with other jurisdictions.²

The attitude of the authorities in the early years was pragmatic. According to press reports of September 2017, the federal supervisor treated crypto foundations as “business as usual”. Cantonal commercial registers examined the documents before registration, while supervision itself took place at cantonal or federal level depending on the purpose.³ The authority had never been designed for this clientele. Its traditional task was the review of annual accounts of charitable and family-related foundations of a public-benefit character. Its staff had little experience with digital tokens, volatile treasuries denominated in ether or boards spread across several continents.

The turning point of 2018

The disputes at Tezos and at the Cardano Foundation, where it proved difficult to remove a foundation president who no longer enjoyed the confidence of the project, changed that attitude. In May 2018 the press reported that FINMA and the Federal Foundation Supervisory Authority intended to examine how blockchain foundations were being handled.⁴ Officials acknowledged that the crypto boom had been a completely new topic for them and that questions of management and supervision were still open. In practice their oversight consisted mainly of the annual review of the accounts. At the same time lawyers in Zug began to advise against embedding commercial activities in a foundation where participants expected profits, which led several projects to convert their structures. The Energy Web Foundation, for example, moved from a foundation to a company. In the Tezos case the dispute with the former president ended with a settlement of 400,000 francs after lengthy proceedings.⁵

The number of crypto foundations nevertheless continued to grow. After eighteen new foundations had been established in 2018 alone, their total reached 58 by the summer of 2019, most of them in Zug. The Libra Association, launched by Facebook and several partners as the sponsor of a global stablecoin, was then based in Geneva. Newer projects often combined a foundation that maintained the open-source platform with commercial companies that earned money through licences, services or the development of applications.⁶ The Libra project was later abandoned and moved away from Switzerland, but the dual structure of foundation and operating company became the standard design.

The supervisory practice as it stands

The Federal Foundation Supervisory Authority developed its practice for crypto foundations mainly through the ordinary instruments of foundation law. It reviews the purpose clause before it accepts supervision, expects a board able to act in accordance with the deed of foundation and examines the annual report, the accounts and the audit report. Where the board fails to act in accordance with the purpose or loses its capacity to act, the authority can issue instructions, appoint or remove board members or, as a last resort, appoint a commissioner. The Tezos episode showed that these powers are real, since the authority obtained the completion of the board by threatening direct intervention.⁷

For the design of a new project in 2026 the foundation remains available but is no longer the default. Many projects now prefer an association, a company limited by shares with a clear shareholder base, or a foundation combined with governance mechanisms on the blockchain itself, in which token holders vote on proposals that the board then executes. Those arrangements raise their own questions, which are addressed in section X of this chapter. The legacy of the ICO years is visible in the language of Swiss practice: lawyers speak of the “foundation model”, the “Zug model” or the “Swiss foundation structure”, and foreign regulators still ask whether a Swiss foundation behind a token is a genuine public-benefit body or an instrument of its founders.

Notes

1. Articles 80–89a of the Swiss Civil Code (ZGB), SR 210, in particular Article 84 paragraph 1, under which foundations are supervised by the public authority (Confederation, canton, commune) to which they belong by virtue of their purpose. Text at droit-bilingue.ch, https://www.droit-bilingue.ch/de-en/2/21/210-84-113.html. ↩
2. finews.ch, “Krypto-Stiftungen: Die Festungswälle bröckeln”, 18 February 2019, https://www.finews.ch/news/finanzplatz/35308-krypto-schweiz-stiftung-mme-tezos-cardano-luka-mueller-oliver-arter-raffaella-piraino-energy-web-foundation-froriep. The article quotes Oliver Arter of Froriep and Luka Müller of MME. ↩
3. swissinfo.ch, “Crypto piggybank foundations proliferate in Zug”, 7 September 2017, https://www.swissinfo.ch/eng/business/500-million-business_crypto-piggybank-foundations-proliferate-in-zug/43494680. ↩
4. Netzwoche, “Blockchain-Stiftungen rufen Behörden auf den Plan”, 24 May 2018, https://www.netzwoche.ch/news/2018-05-24/blockchain-stiftungen-rufen-behoerden-auf-den-plan. ↩
5. finews.ch, “Krypto-Stiftungen: Die Festungswälle bröckeln”, 18 February 2019, https://www.finews.ch/news/finanzplatz/35308-krypto-schweiz-stiftung-mme-tezos-cardano-luka-mueller-oliver-arter-raffaella-piraino-energy-web-foundation-froriep. Oliver Arter is quoted with the remark that a foundation is not easy to tame. ↩
6. swissinfo.ch, “Crypto foundations continue to thrive in Switzerland”, 17 July 2019, updated 28 January 2024, https://www.swissinfo.ch/eng/business/swiss-magnet_crypto-foundations-continue-to-thrive-in-switzerland/45100304. ↩
7. Article 84 paragraph 2 and Article 83d of the Swiss Civil Code, https://www.droit-bilingue.ch/de-en/2/21/210-84-113.html and https://www.droit-bilingue.ch/rs/lex/1907/00/19070042-a83d-en-de.html. On the Tezos Foundation, swissinfo.ch, “Tensions remain as Tezos Foundation replaces director”, February 2018, https://swissinfo.ch/eng/career-trustee_tensions-remain-as-tezos-foundation-replaces-director/43867482, reports that the supervisory authority had set the foundation a deadline to fill a vacant board seat and that failure could have resulted in the supervisor taking control of the foundation. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.