Using a Panamanian SPV for Tokenization: A Strategic Legal Framework

A few years back projects across the world utilised special purpose vehicles (SPV) in order to fulfil joint ventures and finance endeavours. Sectors spanning from oil to mining and from tourism to banking, almost every important development taking place used separate entities to fulfil their objectives. I wouldn’t be surprised if the Moon missions were structured using SPVs. But in order to understand the reason behind use of these legal structures, we must first understand what is an SPV and how does it work in order to dive deeper and see how a project can use this setup in order to have an ideal ecosystem.

An SPV is a distinct legal entity created for a specific objective or asset. They are created in order to isolate risk, fund infrastructure and project finance, securitize and structure finance, take elements off balance sheets and bring clarity to tax/admin regulation. So we can begin to appreciate the many reasons why a project would choose to incorporate an SPV in order to carry out a token emission. It’s not rocket science, but it can save you sleepless nights. The first step is to choose under which jurisdiction you want to incorporate your entity. This choice will greatly influence your project’s existence as it will be this legal person that will engage in transactions, raise funds, assume risk and sign contracts. Once you have incorporated, you face a stage of paperwork which will ring fence your endeavour in order to restrict its activities to solely focus on project operations (by laws, charters and third party management). This marks the creation of a fully functional and capable SPV ready to hold assets, raise funds and operate.

 SPVs can take many forms, depending on the jurisdiction where they are created. Every venture has its unique elements (asset types, activity, financing, etc.) that are going to determine the different parameters their operational and legal setup must that will be necessary when setting up. They can be setup as limited liability companies (LLC), private companies limited by shares (LTD), société à responsabilité limitée (Sàrl), besloten vennootschap (BV), Aktiengesellschaft (AG) and finally, one of the most used of all, the Panamanian sociedad anónima (SA). Why leave the best for last? Because in this article we will explore the usability of Panama’s entities as robust and versatile legal vehicles for tokenization.

We keep mentioning tokenization but until we define what it is we cannot build a synergy between it and special purpose vehicles. According to McKinsey & Company, “tokenization is the process of creating a digital representation of a real thing”. According to the International Monetary Fund, “tokenization creates assets on a programmable ledger, a record-keeping system for financial transactions that market participants can trust and share access to.” While one sees it as just a representation the other adds that its a ledger that market participants can trust. So it is a new way of having a digital record or a representation of an asset or of a project or of a transaction.

So why issue a token? A company might use tokens to reduce management costs, improve technical and social scalability, or experiment with new organizational forms. Tokens can support R&D, strengthen competitive positioning, or enable new services that complement the company’s core business. They are particularly well-suited to open systems, communications networks, shared infrastructure, distributed storage, where relying on a single company creates monopolistic risks. In many cases, several companies depend on the same critical infrastructure and can save money by building it collaboratively instead of independently. Tokens provide an effective mechanism for coordinating and funding these shared, open systems. A project typically moves from the idea of issuing a token to the actual emission through a series of technical, economic, and legal steps designed to ensure the token has a purpose, a functioning market, and a compliant launch.

Why use a special purpose vehicle for your token emission?

There are infinite reasons behind why a special purpose vehicle should be used for a token emission. A separate legal entity allows for a clean, independent, legally defensible, and operationally efficient structure around the token, ensuring investors and segregating it from the core business. An SPV keeps the token activity separate from the main company. This protects the core business if rules change or if the token faces legal issues. It also lets the team choose a safer or clearer jurisdiction for the token without moving the whole operation. An SPV gives the token its own rules, treasury, and emission plan. This prevents confusion between equity and tokens inside one company. It also makes vesting and rewards easy to manage and easy to explain.

Investors want to know what they are buying. An SPV gives them a clean structure with no extra business risks. Many funds and exchanges expect this setup before they agree to work with a project. The main company holds its staff, contracts, and intellectual property. The SPV handles only the token. This shields core assets if something goes wrong with the token side of the project. An SPV, often a foundation, can support a shift toward community governance. It can hold rights, manage funds, and sign contracts as needed. This lets the project change over time without legal gaps. The SPV can run sales, manage emissions, hold treasury funds, and deal with KYC and audits. It acts as the main counterparty for exchanges and market makers. This keeps the token launch simple, clear, and reliable.

What exactly does the token represent?

When a token is issued through a special purpose vehicle, the most common misunderstanding is to assume that the token is the asset. It is not. The token is a technical instrument. The legal reality sits one layer below, inside the SPV. In a Panamanian structure, the SPV is the legal person that owns assets, enters into contracts, assumes obligations, and enforces rights. The token does not replace this legal framework. Instead, it acts as a digital pointer to a set of rights, expectations, or functionalities that are defined off-chain and anchored in the SPV’s governing documents. Depending on how it is structured, a token may represent:

• a contractual claim against the SPV (for example, a right to receive services, access, or future benefits),
• an economic interest linked to a defined activity (such as revenue participation or usage-based rewards),
• a governance right (voting, signaling, or participation in decision-making),
• or a pure utility right within a technical system.

            What matters is not the label, but the legal mapping. The foundation charter, internal regulations, and token terms and conditions must clearly describe what the token does and does not grant. This is where many projects fail. If rights are vague, investors assume equity. If economic language is careless, regulators assume securities. The SPV is the tool that allows these boundaries to be drawn cleanly. Panamanian law is particularly well-suited to this approach because it is grounded in private law principles. The foundation can define its purpose, how assets are used, and how third parties interact with it. Token holders are not shareholders. They do not own the foundation. Their rights arise solely from the contractual framework put in place by the SPV and referenced by the token.

This separation is critical. The smart contract enforces technical rules. The SPV enforces legal ones. Together, they create a system where on-chain behavior is backed by an off-chain legal reality that courts and counterparties can recognize. Without this mapping, a token is just code. With it, it becomes a legally intelligible instrument.

Why setup in Panama instead of other countries like Cayman, Dubai or Singapore?

Setting up the vehicle in Panama gives you a stable legal system, low running costs, and a fast setup process. The law does not classify most token activity as regulated, which reduces the risk of surprise licensing needs. You can run a token project without a VASP or CASP regime, and this keeps the structure lean. Panama foundations work well for token issuances. They can hold IP, manage treasury funds, and support governance without shareholders. They also give strong liability protection and clear rules on how the assets are used.

Costs in Panama stay low compared to Cayman, Dubai, or Singapore. Annual fees, local service providers, and compliance work stay simple. This helps early-stage projects keep their burn rate controlled. Panama also allows directors and founders to remain outside the country. There are no local management requirements for a foundation that holds digital assets. This avoids the residency or substance rules that appear in other jurisdictions.

Cayman, Dubai, and Singapore offer strong systems, but they tend to impose higher costs or tighter oversight on token work. Some require economic substance, local officers, or more frequent filings. Panama gives a lighter and more predictable path. In short, Panama offers legal clarity, low cost, and simple maintenance. This makes it a practical place to hold and issue tokens while keeping the operating company free to work anywhere in the world.

Practical example: structuring a token project using a Panamanian SPV

To understand how all these elements come together, it helps to look at a simple, practical structure. Consider a project building a digital platform or protocol that plans to issue a token to support its ecosystem. The project usually begins with an operating company. This entity employs the team, develops the technology, and signs commercial contracts. It is a normal business, with normal risks, and it operates wherever it makes sense for talent and market access. At this stage, no token is issued and no special regulatory exposure is created.

A Panamanian private interest foundation is then incorporated as a special purpose vehicle. Its purpose is narrowly defined: to support the protocol and manage the token ecosystem. The foundation has no shareholders and no commercial activity of its own. Its charter and internal regulations describe how assets are held, how decisions are made, and how third parties may interact with it. The operating company licenses or assigns specific intellectual property rights to the foundation, usually on a limited or conditional basis. This ensures the foundation can support the ecosystem without taking over the entire business. The separation remains clear: the company builds and operates; the foundation supports and coordinates.

Next, the token smart contract is deployed. The foundation is designated as the issuer or initial holder of the token supply. The emission schedule, vesting rules, and governance mechanics are embedded in code. Token terms and conditions are adopted by the foundation and referenced publicly, making clear what rights the token does and does not confer. Treasury assets, often a mix of stablecoins and the project token, are held in multisignature wallets. The foundation acts as one of the signatories, sometimes alongside independent participants. This ensures that treasury movements follow both on-chain logic and off-chain decision-making rules. Payments to contributors, grants, or ecosystem incentives flow through this structure.

 As the project matures, governance can evolve. Early on, decisions may be taken by the foundation council. Over time, token holders may gain voting or signaling rights, with the foundation executing outcomes where legal personality is required. This allows the project to move toward decentralization without losing legal continuity or accountability. Throughout this process, the operating company remains insulated. If the token faces market, technical, or regulatory issues, the core business is protected. If the business pivots, the token structure can remain stable. The SPV absorbs complexity so that the rest of the project can focus on execution.

This is the real value of a Panamanian SPV in tokenisation. It does not replace technology, and it does not over-regulate it. It provides a legal backbone that lets a token system exist in the real world, interact with counterparties, and evolve over time without collapsing under its own ambiguity.

Conclusion: Bridging Blockchain Innovation with Legal Certainty

As we have explored, the use of a Panamanian Special Purpose Vehicle is not merely a corporate trend but a fundamental necessity for serious blockchain projects. By separating the technical issuance of a token from the core business operations, founders can mitigate risk, attract institutional investors, and ensure long-term sustainability. Panama remains a top-tier choice for tokenization due to its unique combination of private interest foundations, tax neutrality for foreign-sourced income, and a legal system that respects the autonomy of private contracts.

In a digital landscape where regulatory clarity is often elusive, a well-structured SPV provides the "legal mapping" required to transform code into a recognized financial instrument. Whether you are launching a DAO, a DeFi protocol, or tokenizing real-world assets (RWA), the jurisdiction you choose will define your project's trajectory.

Secure Your Token Project with Pardini & Asociados

At Pardini & Asociados, our Blockchain and Crypto Practice is dedicated to helping innovators navigate the complexities of digital asset regulation. With over 40+ years of experience in Panama and a deep understanding of Web3 technology, we provide the expert legal counsel needed to structure, incorporate, and launch your tokenized ecosystem with confidence.

Our services include:

• Incorporating Panamanian Corporations and Foundations for token issuance.
• Drafting Token Terms and Conditions and legal opinions.
• Advising on KYC/AML compliance for digital asset platforms.
• Structuring DAOs and governance frameworks within a legal wrapper.

Ready to launch your tokenized project in Panama? Visit www.pardinilaw.com to learn more about our Blockchain & Crypto Practice or contact our team today for a tailored consultation.