Structuring Assets with SPV/SPC
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The structuring of a tokenized asset through a Special Purpose Vehicle (SPV) or Special Purpose Company (SPC) is a crucial legal step to ensure compliance, asset protection, and transparent investor participation. The SPV or SPC acts as the legal issuer of the security tokens, managing ownership, revenue distribution, and investor rights.
When an issuer incorporates an SPV/SPC in a foreign jurisdiction, it must establish a clear legal connection between:
The issuing SPV/SPC – The entity responsible for token issuance and investor management.
The local operating company (asset owner) – The entity that holds and operates the underlying asset.
This connection is structured through legally binding agreements that define ownership, control, and revenue flows.
The choice between an SPV (Special Purpose Vehicle) and an SPC (Special Purpose Company) depends on the issuer’s tokenization model, regulatory strategy, and investor structure.
Legal Structure
Standalone entity
Umbrella company with segregated portfolios
Use Case
Single asset or single-purpose project
Multiple asset classes or investment structures
Investor Risk Segregation
Not segregated beyond the entity
Fully segregated among different portfolios
Regulatory Complexity
Simpler to manage
Requires more governance and compliance measures
Ideal For
One-time asset sales, real estate tokenization, structured debt issuance
Multi-asset funds, real estate portfolios, commodities, investment firms
If tokenizing a single asset, such as a real estate property, artwork, or corporate equity, an SPV is sufficient.
If managing multiple tokenized projects under one umbrella, an SPC with multiple segregated portfolios is more efficient.
When the SPV/SPC is incorporated in a foreign jurisdiction, the local operating company (which owns or manages the underlying asset) must be legally linked to the token-issuing entity.
This is essential for regulatory compliance, investor protection, and revenue distribution.
Asset Holding Agreement
Establishes the legal framework of the asset’s ownership.
Defines the rights, obligations, and transferability of the asset from the local entity to the SPV/SPC.
Revenue Distribution Agreement
Regulates how income is shared with token holders.
Defines the distribution of rental income, dividends, or profit-sharing mechanisms between the local entity and the SPV/SPC.
Management Agreement
Defines operational control and asset maintenance responsibilities.
Specifies whether the local entity retains operational control or transfers it to a third-party management company.
Regulatory Compliance Framework
Ensures adherence to domestic and foreign financial regulations.
Outlines investor reporting requirements, KYC/AML procedures, securities compliance, and tax obligations.
These agreements ensure clear ownership rights, enforceable investor protections, and transparent financial operations.
Use Case: Tokenized Real Estate in Germany
A real estate developer in Germany wants to tokenize a residential property portfolio but chooses to issue security tokens through a Liechtenstein SPV to leverage favorable regulatory conditions.
Step-by-Step Structuring Process:
The real estate remains legally owned by the German entity.
The German entity signs an Asset Holding Agreement, transferring economic rights of the property to the Liechtenstein SPV.
A Revenue Distribution Agreement ensures that rental income from tenants is transferred to the SPV.
The SPV issues security tokens representing fractional ownership in the property’s cash flows.
Investors receive passive income from the asset through the tokenized revenue-sharing model.
The Management Agreement allows the German entity to continue managing the properties while reporting financial performance to the SPV.
Result:
Investors receive legally recognized digital securities.
The issuer benefits from a tax-efficient, compliant jurisdiction (Liechtenstein).
The property remains under local operational management while revenue flows to token holders.
Each tokenization model requires different legal structuring for an SPV or SPC.
Asset Sale Model
SPV owns and sells fractional ownership of the asset.
Requires Asset Holding Agreement to transfer ownership rights.
Business Equity Sale Model
SPV issues equity tokens linked to company shares.
Must comply with securities laws in the issuance jurisdiction.
Asset Enhancement & Yield Model
SPV raises funds for upgrades and distributes profits.
Revenue Distribution Agreement ensures profit-sharing for investors.
Distressed Asset Reconstruction Model
SPV raises capital to restore an underperforming asset.
Debt & equity hybrid structuring may be required.
Asset Acquisition Model
SPV purchases a new asset and tokenizes ownership.
Clear transfer of ownership and investor protections are required.
Structured Debt Issuance
SPV issues tokenized bonds linked to asset cash flows.
Prospectus registration may be required for compliance.
Decentralized Debt Financing Model
SPV collateralizes an asset for DeFi borrowing.
Smart contract governance & collateral reserves required.
Commodity & Resource Tokenization Model
SPV holds physical commodities and issues tokens.
Custody agreements & Proof of Reserves (PoR) compliance needed.
When structuring an SPV or SPC, issuers must address legal, tax, and compliance obligations in both the jurisdiction of the SPV/SPC and the country where the asset is located.
Securities Compliance – Issuers must comply with SEC (U.S.), MiFID II (EU), FCA (UK), MAS (Singapore), or ADGM (UAE) depending on investor reach.
Cross-Border Legal Recognition – If an SPV is used outside the asset’s country, ensure enforceability of agreements between the local entity and SPV.
Tax Structuring – Offshore jurisdictions (e.g., BVI, Cayman Islands, Liechtenstein) offer tax advantages but must comply with international anti-avoidance laws.
Investor Protection & Disclosures – Clear documentation on investor rights, asset valuation, and payout mechanisms is required.
SPV/SPC Governance & Control – Define who holds decision-making power: the issuer, investors, or a third-party fund manager.
Decide on SPV vs. SPC Structure – Choose based on single vs. multi-asset tokenization.
Select Jurisdiction for SPV/SPC – Optimize for compliance, taxation, and investor accessibility.
Sign Legal Agreements Linking SPV & Asset – Establish ownership, revenue sharing, and operational control.
Ensure Regulatory & Tax Compliance – Align with domestic and foreign securities laws.
Prepare Investor Documentation – Disclose rights, risks, and legal protections in tokenized asset offerings.
Structuring an SPV or SPC ensures that tokenized assets have a compliant legal framework, enforceable ownership rights, and a clear investor revenue model. The legal agreements linking the SPV/SPC to the underlying asset are critical in ensuring regulatory compliance, tax efficiency, and investor security.