Charles Hoskinson Proposes Swiss Foundation Relocation After Community Backlash

Charles Hoskinson, the founder of Cardano, has called for the Cardano Foundation (CF) to relocate from Switzerland to a jurisdiction that allows its users to elect board members, after the Layer 1’s community raised concerns over transparency and governance practices.

In a Dec.17 post on X, Hoskinson expressed concerns over the Foundation's current governance structure, which operates under Swiss law as a not-for-profit and does not allow for community-based board elections, according to Cardano’s website.

“Here's a question before they will lie about how the current board got appointed,” Hoskinson’s X post reads. “If Switzerland doesn't allow you to democratically elect the board members, then why can't you move the Foundation to a new jurisdiction that will? The assets can be granted to another body.”

Cardano Foundation’s board is made up of four board members and four executives, including CEO Frederik Gregaard and Chairperson Jillian MacNab. In compliance with Swiss laws, the Foundation is not a membership-based organization and “does not foresee the election of its board by a community of members,” according to the Cardano Foundation’s website.

The Cardano Foundation did not respond to a request for comment.

Ongoing Criticism

Hours before Hoskinson’s post went live on X, the Cardano Foundation issued a statement on Dec. 17 in response to ongoing online criticism regarding its governance and management. More specifically, community members on X accused the foundation of concealing information and questioned whether the current leadership aligns with the values of the Cardano community.

The Foundation emphasized its commitment to transparency, clarity, and open dialogue.

"Over the past few years, we have put considerable effort into improving this, with the latest improvements being the launch of our financial insights report, along with our on-chain audited financial statements to complement our annual activity report,” the post said.

Impact of Jurisdiction

Hoskinson's comments highlight the impact of jurisdiction on the governance of decentralized blockchain organizations. High-profile crypto organizations with foundations based in Switzerland include Ethereum, Tezos, and Polkadot (the Web3 Foundation).

While Switzerland, specifically the Zug province, has been known as the “Crypto Valley” ever since Ethereum set up shop there, other jurisdictions have implemented more favorable rules toward the industry over the years, including provisions for Decentralized Autonomous Organizations (DAOs).

“At the moment, there are doubts about the current structure in Switzerland, which does not fully comply with the principles of decentralization that crypto investors are seeking,” said Alexandr Sharilov, CEO of CoinDataFlow. “This structure can limit the direct participation of the interested community, which cannot make management decisions.”

Some Flexibility

Still, Sharilov explained that under Swiss law, foundations have the flexibility to design their own statutes, allowing for adaptable practices. While there are limitations on community involvement in governance, some of these restrictions can be worked around.

After criticizing the existing arrangement, Hoskinson suggested in his X post that moving the Foundation to regions like Abu Dhabi or Wyoming—known for their blockchain-friendly environments—could facilitate a governance model that promotes transparency and member participation.

The suggestion to relocate to Wyoming or Abu Dhabi is rooted in their progressive legal frameworks tailored for decentralized technologies, Gordon Hirsch, Founder and Managing Attorney at Hirsch Law Group, told The Defiant.

Hirsch explained that Wyoming has introduced legislation supporting DAOs, which allow governance models such as community-elected board members. He also noted that the Abu Dhabi Global Market (ADGM) provides a regulatory environment that aligns with Hoskinson’s vision for Cardano’s governance.

The Foundation also announced the launch of a series featuring members of its leadership and various subject matter experts. This initiative aims to provide a regular platform for open discussions.