Swiss Associations - an underrated DAO solution

Switzerland is curiously underrated as a DAO jurisdiction. Despite deep pools of legal and financial expertise, a flourishing native-grown web3 industry, and strong local desires to play an important role in the web3 space, Switzerland has fallen behind as a place through which to wrap and manage DAOs. Across the English speaking world, project leads and their legal advisors tend to prioritize jurisdictions such as the Cayman Islands, the BVI, or Panama. Relatively few such projects utilize structures in Switzerland. Why is this?

Swiss Foundations vs Associations

Conversations with international lawyers reveals that Swiss structures are perceived as expensive, time-consuming to set up, and lacking a certain flexibility. Much of this perception has to do with the Swiss foundation. Well suited to the needs of major projects and possessed of a certain reputational gravitas, the foundation nevertheless poses challenges to smaller, growing teams and their DAO or protocol projects. There are the various notarial stipulations, the comparatively large initial capital requirements, and high annual fees. Perhaps yet more importantly, there is a very limited flexibility of governance - once established, the purpose of a foundation is fixed, and cannot easily be changed. 

However, Switzerland holds another relevant option for web3 teams. The Swiss Association is a flexible and private structure, and one well suited to the needs of many projects.

What is the Swiss association?

The Swiss association (Verein) is a flexible legal structure governed by Articles 60–79 of the Swiss Civil Code. Originally designed for non-profit and civil society organizations, the association form allows a group of individuals or legal entities to pursue a common purpose through a registered legal entity.

The key characteristics of a Swiss association are:

• Legal personality: It becomes a legal entity upon the adoption of by-laws and the appointment of a governing board.
• Limited liability: Members are not personally liable for the debts of the association.
• Membership based: The association is formed of its members, bound together by the rules of the association.
• Non profit: Swiss associations are non-profit, though they can conduct commercial activity where this is incidental to their main purpose

The benefits of the Association as a DAO structure

While originally designed for civil and charitable initiatives, the association has proven to be highly adaptable for crypto-native use cases — particularly as a neutral, nonprofit “wrapper” for decentralized organizations. This is for a number of reasons.

It is useful that Swiss associations offer legal personality and some amount of liability limitation - both are useful for DAOs. It must be noted, however, that all of the various DAO wrappers, DAO vehicles, and DAO structuring options seek to provide these. What differentiates the Swiss association is its combination of speed, flexibility, cost-efficacy, and privacy.

1. Easy setup: The entity is formed in a comparatively lightweight manner - it begins when two or more individuals decide to form an association, and then adopt articles of association. 
2. No minimum capital requirement: Unlike companies limited by shares, there is no need to contribute capital to establish an association. Unlike a Swiss Foundation, it does not need to be endowed with capital in order to begin existence. 
3. Flexible and customisable governance: The articles of association contain the by-laws that will govern the life of the association. These are highly flexible DAOs to map their token-based or on-chain governance into an off-chain legal structure.
4. Wrapping of tokenholders: Using the flexibility of Swiss association rules, DAO token owners can be deemed as members of the association itself. In contrast to other structures, such as the Cayman Foundation,  DAO tokenholders can thus be wrapped within the association, and act as voting members of its governance body. This offers a more pure 'wrapping' or encompassing of the DAO into the corporate vehicle.
5. On-chain management: Depending on the rules of the association  / DAO, management can also be algorithmically managed on a chain. 
6. Private: Associations that do not carry out commercial activities do not have to be officially registered, preserving privacy for the project. 

Key roles and institutions

Being decentralized and based to varying degrees on autonomous smart contracts, DAOs struggle to be contained within pre-existing legal systems. It is important, therefore, to consider the nature of the structures that have been developed to wrap DAOs, and to think through the different roles and institutions that each wrapper creates. 

The Members: these are the individuals who constitute the association. Under Swiss law, there must be at least two of them. Projects that wish to use Swiss association for their DAOs can simply state that the members of the association are anyone who holds the governance token on their project. By letting token holders be members of the legal wrapper entity itself, the Swiss association is an elegant solution to the problem of providing individual token holders with limited liability. Again, this stands in contrast to the Cayman foundation, which provides limited liability for the foundation, but not for the token holders themselves. 

The General Assembly: This body is composed of all the members, and functions as the supreme governing body. It appoints the board, and can choose to vary the Article of Association through its voting procedures. In a DAO context, this is the tokenholders. Because the token holders make up the association and control the association, they arguably have more direct power over the actions of the DAO vehicle than might be seen elsewhere. 

The Board: an executive body required for managing the association. Each association must have at least one member. The board is legally responsible for the actions of the association, and enacts decisions made by the general assembly. This is separate to the directors or councillors of foundation entities

The Articles of Association: The Articles of Association function as the constitution of this body. In a DAO context, this would be the constitution of the DAO. This document includes rules on  decision making processes, the delegation of powers to committees or token holders, procedures for amending rules, and membership rights and responsibilities. 

Use Cases for Swiss Associations in Web3

Swiss associations are used across the crypto ecosystem for a variety of DAO functions. Here are the most common patterns:

1. Ecosystem Development & Protocol Stewardship: DAOs that govern open-source protocols (DeFi, L2s, LLMs) use associations to:

• Hold protocol IP
• Coordinate development grants
• Support governance operations

2. Grant-Giving and Treasury Management: Grant DAOs or public goods funds use associations to:

• Receive donations
• Disburse funds based on DAO votes
• Maintain accountability

3. Delegate Coordination & Working Groups

Some DAOs create associations to:

• Coordinate working groups or service providers
• Act as employer or contractor
• Serve as fiscal host for contributors

This is common in "Service DAOs" or technical DAOs managing upgrades and operations.

4. Advocacy and Regulatory Engagement

Associations can be used as neutral entities to:

• Represent DAO communities in policy discussions
• Join trade groups or alliances
• Commission legal research or public reports

Example: A DAO funding standards for AI safety or data sovereignty might use a Swiss association to interface with regulators.

Limitations

Swiss associations cannot return value to tokenholders. This means they are not very useful for DAO projects that seek to distribute profits back to members. Similarly, DAOs with a strong commercial purpose are better off considering other structures, given the not for Profit nature of the swiss association.