Do Web3 businesses dream of electric offices?


The emergence of Web 3 technologies such as blockchain has the potential to cause a paradigm shift in the way businesses are conducted globally. The positive impact of Web 3 technologies is not limited to existing businesses but also individual artists and creators.

While some applications of Web 3 technologies, especially financial services, may currently pose unique challenges to regulators and businesses, many other use cases, including record keeping, new mediums of access to content and services such as through metaverse platforms and non-fungible tokens  are creating unprecedented experiences for users and novel opportunities for businesses. In this article, we discuss both, regulation of and opportunities in the Web 3 space.

Law today

As with laws and regulations surrounding technology and finance across the globe, most nation states adopt their own understanding of blockchain and blockchain enabled technology into laws and regulations. This leads to a discordant regulatory landscape, across jurisdictions, for business to navigate. Adding to this uncertainty, international standards or treaty laws surrounding common objects often take years, if not decades, to materialize and be implemented.

Presently, we see very few economically powerful nations entering into the realm of regulating cryptocurrency in a business forward manner. The United States of America, for example, has taken a broad approach and recently introduced a bipartisan bill titled the Lummis-Gillibrand Responsible Financial Innovation Act. This bill seeks to regulate all things web3 by creating a regulatory framework for digital assets; pioneer legal reform and regulation across various regulatory entities; and update current laws with language regarding digital assets. We should expect similar legislation in many major developed jurisdictions.

Juxtaposed to this approach, in a bid to attract investment, several developing nations have created legislation targeted at enhancing the ease of doing business for web3/crypto businesses. The creation of bespoke legal entities such as ‘Foundations' in the BVI that espouse the philosophies of new age web3 governance models such as DAOs have allowed newly minted web3 platforms to find a home and have a juristic person representing it. 

Business today

Blockchain is a protocol that can and will be implemented in various ways on the internet and in ITES. There are, of course, new business models and opportunities that have been created by this, such as exchanges, metaverse, collectibles such as NFTs, mining operations, boutique investment solutions, etc, that are big, loud and visible examples of blockchain as a business. There are also some discreet implementations of blockchain that may be invisible to the individual or business user. 

In the current environment the environment as it exists today, the two kinds of businesses are adopting applications for Web3 the two main adopters of web3 are (i) existing businesses such as social media, e-commerce,  P2E games, etc. that see a clear transition to blockchain enabled triple entry bookkeeping or record keeping; and (ii) businesses that exist purely as a result of the opportunities web3/blockchain technology presents. Even though blockchain is breaking traditional mechanisms for bookkeeping and transmitting value or consideration from one person to another, there needs to be an analysis of existing legal framework governing these transactions as it will impact new blockchain businesses equally.


At the forefront is taxation and the related liability. Nothing is more certain than taxation and revenue authorities will always extract their dues. Blockchain businesses need to identify the impact of VAT/GST or any other indirect taxation applicable to their product and/or service stack to collect adequate indirect taxes from their users/customers. Failing an accurate assessment of the exigibility and quantum of indirect tax may, and has already in some cases, lead to prosecution and recovery of tax dues. Notably, in the absence of a legal entity that provides a cover for the owners of such businesses, these due can be recovered from the members of the business, as determined by the best intentions of the revenue authorities. In some cases the courts have held that every person involved with such an entity is deemed to be a ‘general partner', and general partners are generally liable for the debts and liabilities of the partnership, jointly and severally.

Legal Wrapper

It is advisable for such entities to look at establishing a ‘Legal Wrapper' to limit their personal liability. A legal wrapper is a juristic entity that can contain the web3 business/platform within it. It is typically governed by a charter that mirrors the ‘philosophy' or ‘principles' of the online business community it represents. The choice of legal wrapper depends on the kind of business, business objectives and business model. Some web3 enterprises fit within the four corners of existing legal entities, such as societies or foundations or LLCs (specific to the BVI and other Bahamian Islands, Switzerland, etc.). Some jurisdictions are also offering bespoke legal entities that cater to web3 or internet community needs and can be looked at. Having a legal wrapper is also essential for ownership. Any community project that results in a monetizable product, needs to protect the ownership of that product. Having a legal wrapper and assigning the community's rights to it allows consolidation of IP and other assets preventing the deadly fragmentation of rights.

The ability to operate businesses entirely online has resulted in a migration sort of panspermia of tech start-ups from traditional bastions of tech companies to more favourable jurisdictions. Finding a home for your intended activity involves assessing the regulatory framework in multiple jurisdictions, to find the best fit for your activity. Nations such as the British Virgin Islands, the Bahamas, Portugal, Croatia, Malta, UAE and Singapore are among some jurisdictions that offer legislative support to web3 businesses. Naturally, businesses are attracted to the ease of establishment and the legitimate expectation of acceptance locally. Many of the largest economies in the world, including India, are currently studying the blockchain landscape, and it is hoped that web3 business friendly regulations should soon be forthcoming. 


Identifying a home for your business is not quite complete without effective and efficient banking solutions being available to you. This is presently the biggest hurdle for web3 today. Banks are wary of blockchain and web3 businesses for two main reasons: (a) the likelihood of financial impropriety with anonymous transactions is very high; and (b) cryptocurrencies are a direct competition for their monopoly on money transmission.

Moreover, what we have seen is the jurisdictions that are most welcoming to web3 have fairly ‘old school' banking systems (read laborious and filled with red tape). This often defeats the purpose of being a business that exists only on the web by needing a physical presence to access banking. Banks in more developed banking jurisdictions that are progressive and have adopted web3 as the new normal are often reluctant to do any business with clients who are in the web3 space. Ostensibly for reasons of the risk associated with dealing with the transfer of virtual assets is (a) above, but this is debatable. This leaves a serious gap in the industry where web3 businesses, that have incredible turnovers, remain unbanked. Some international banks have started to come up, in jurisdictions such as Switzerland, to service this gap. Their success is, however, yet to be seen. We anticipate the recent open banking and neo banking regimes that have been encouraged by regulators in developed and some developing jurisdictions, like EU, UK and India, may be best suited to bridge this gap. 

Intellectual Property

While nations are attempting to regulate financial frameworks to promote the safe use of web 3 services (and in some cases instances prohibit its use altogether), the global framework for IP laws appears to accommodate Web 3 services quite seamlessly. While there are some kinks on how IP rights are protected and enforced on Web3, they are likely to iron out over time. Moreover, the monetisation opportunities it offers to the creator and developer communities are immense.

Web3 offers new mediums such as NFTs, metaverse, etc. for creators to provide access to their content to users and collaborators. The ease of licensing of IP with transparent accounting and record-keeping methods (enabled through the use of blockchain and smart contracts) is a game changer for the creator economy. However, at the same time, the importance of legal wrappers and dumb contracts  enveloping the assertion and/or grant of IP rights through such mediums should not be ignored.    

A boom in the use of Web 3 services has also boosted the development of innovative technologies at all levels of the Web 3 stack i.e. protocol level, infrastructural level, use case level and access level. These technologies being largely software products and services can be protected by copyright and patents. Many established businesses including Meta, IBM, McDonald's, Nike, and Hermes have either sought to protect or enforce their IP in the Web 3 space.    

Creation of IP relating to Web 3 technologies and the interest of the established businesses in this space is indicative of the impending mass use and implementation of the same. Mass adoption of technologies may also ease in bringing a swifter change in regulatory frameworks to enable the ease of doing business.  


Despite being the 13th year running, in the so called blockchain revolution, we are still very far from mass adoption. For the sake of perspective, the internet hit 1 billion users in the year 2005. Currently, data shows that Ethereum adoption is at the same place today where the internet was in the year 1996. At the current rate, it is expected Ethereum will hit 1 billion active users only by the year 2031. In the same vein, the Internet Corporation for Assigned Names and Numbers or ICANN, the organization that manages and regulates the internet, was also only established in 1998, i.e. just before the Dot Com crash. Given the significant value of the Web3 industry even in the state that it is in today, we anticipate that its size and value will far outstrip the internet in the future. Web 3 businesses that create a strong foundations today will be the ones that successfully weather future market bubbles and crashes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.