A protocol team arriving in the Gelephu Mindfulness City has two questions the code cannot answer: who around the protocol is carrying on a regulated activity, and what legal person the collective actually is. GMC has no DAO statute, no foundations statute and no DeFi carve-out. Basnet Law Pte. Ltd., the first law firm incorporated in the Gelephu Mindfulness City, advises protocol teams and token-holder collectives on wrapping a DAO under the Companies Act 2025 or the LLP Act 2026 and on where the Financial Services Act 2025 perimeter falls. This page explains the entities available and the perimeter tests.
How we help
- Mapping every person around the protocol, from deployer to multisig signers, and testing each against the regulated activities.
- Designing for the exclusions that protect true infrastructure: interfaces that merely enable communication, routers that do not match orders, and no team-controlled keys over user assets.
- Forming the wrapper: a company whose constitution binds directors to on-chain votes, or an LLP whose agreement carries the governance rules.
- Structuring a not-for-profit or treasury vehicle where a foundation would be used elsewhere, using the entities GMC actually provides.
- Advising foreign teams on the non-GMC person exclusions and on marketing into GMC.
- Where a venue, vault or custody function is regulated, preparing the GFSO application and the resident Approved Person appointments.
How DAO and DeFi structuring works in GMC, in plain terms
The Financial Services Act 2025 regulates activities, not technologies. No person may carry on a regulated activity by way of business in GMC unless licensed or exempt, and the core activities all refer expressly to virtual assets. Deploying immutable smart contracts is not in itself any of those, so the question is who, if anyone, is carrying on a specified activity. Hosting a front-end that lets users swap tokens is tested as arranging; running a matching engine where orders interact is tested as operating a trading facility; controlling keys over user funds is tested as custody; rebalancing a vault at your own discretion is tested as managing assets; and pooling user deposits for shared returns is tested against the collective investment fund definition. A person acts by way of business if the activity itself constitutes a business, if it holds itself out as willing to engage in it, or if it regularly solicits others; a protocol with a marketing site, a community channel and a fee switch is holding itself out whatever the code does.
The exclusions do the work for genuine infrastructure. Arrangements that do not bring about the transaction are excluded, as is merely providing the means by which parties communicate, so a pure interface that lets a user sign with their own wallet has a credible argument that weakens as it adds routing logic. A facility that merely transmits orders that do not interact is not a trading facility, and whether an automated market maker brings together third-party interests is an open question GFSO has not answered. Where no team-controlled key can move user assets, nobody is safeguarding for another. A team outside GMC relies on the non-GMC person exclusions, which protect dealing and arranging resulting from an approach the team did not solicit. Some rules apply to everyone: misleading, deceptive, fraudulent or dishonest conduct in relation to any virtual asset is prohibited, as is any regulated activity involving an algorithmic stablecoin or privacy token.
On the entity, GMC offers a company, an LLP, a limited partnership, a general partnership, a business name, a trust under the received law of equity and a fund, but no foundation and no DAO Act. An unwrapped DAO carries a specific risk: persons carrying on a business in common with a view of profit are partners under the Partnership Act 2026, jointly liable for its debts, so a token-holder collective that deploys treasury capital for a return may already be a partnership. A private company can be formed with one member and can restrict its own capacity so that specified decisions must follow an on-chain vote. An LLP has separate legal personality, partners are not personally liable except for their own wrongful acts, governance can be written into the LLP agreement, and it is tax-transparent. Each needs a resident director or manager.
Where a foundation would be used elsewhere, the nearest GMC equivalents are a not-for-profit company, in the form whose members undertake to contribute a set amount on a winding up rather than hold shares, or a purpose trust under the received law of equity. The not-for-profit tax exemption and the philanthropic purpose trust exemption are enacted but commence only on Gazette notification. If any element is regulated, GFSO licenses only a body corporate or a partnership with its head office in GMC and identified, resident Approved Persons, which an anonymous DAO cannot supply.
Who this is for
- Protocol teams deciding whether to build from Gelephu and what needs a licence.
- Token-holder collectives that need legal personality and limited liability.
- Projects that would use a foundation elsewhere.
- Foreign DeFi teams with GMC users or GMC-facing marketing.
How an engagement runs
- Perimeter map. We list every person around the protocol and test each against the regulated activities, the by-way-of-business limbs and the territorial rule.
- Design for exclusions. We advise on key management, interface scope, routing and fee design so the protocol sits where the team intends.
- Wrapper. We form the company, LLP or trust-based structure, draft the constitution or LLP agreement around the governance rules and appoint resident officers.
- Conduct and marketing. We put the public-statements policy and promotion controls in place.
- Licensing where needed. If a venue, vault or custody function is regulated, we prepare the GFSO application and Approved Person appointments.
Frequently asked questions
Is a decentralised exchange legal in GMC without a licence?
There is no prohibition on decentralised technology as such. The question is whether an identifiable person operates a facility on which virtual assets are traded or arranges deals by way of business in GMC. A router that merely transmits orders is excluded; a matching engine run by a team is not.
Does a DAO need to register in GMC?
Nothing requires it, but members of an unwrapped DAO carrying on business in common with a view of profit may be partners with joint liability. A GMC company or LLP gives legal personality and limited liability.
Can I set up a foundation in GMC?
GMC has no foundations statute. The nearest equivalents are a not-for-profit company or a purpose trust under the received law of equity. We choose between them on the purpose, the funding source and the tax position.
Can a foreign DeFi team serve users in GMC?
A non-GMC person dealing or arranging as the result of a legitimate approach, or with or through a licensed firm, is excluded. Solicitation aimed at GMC removes that protection.
Talk to GMC counsel on the ground
Basnet Law Pte. Ltd. is the first law firm incorporated in the Gelephu Mindfulness City. A short conversation early in a matter usually saves time and cost later. Write to basnet@basnetgmc.com or office@basnetgmc.com with a few lines about your plans, and we will tell you plainly what is needed, how long it takes, and whether we are the right fit.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
