The Cayman Islands recorded a 70% year-on-year increase in Web3 foundation company registrations, driven by demand for legal certainty and tax neutrality as new Crypto-Asset Reporting Framework (CARF) rules approach. The surge has coincided with regulatory changes that reposition the jurisdiction as a destination for DAOs and treasury-heavy foundation companies, signaling a market shift toward institutional-grade structures.
Cayman Islands Web3 Foundations and Legal Structure Demand
The jurisdiction’s foundation company vehicle provides a defined legal personality that addresses governance and liability risks common to decentralized autonomous organizations. After litigation in the United States showed an unincorporated DAO can be treated as a general partnership, the Cayman structure offers limited liability for token holders and the ability to contract, hold intellectual property, and own assets within a recognized legal entity.
The Caymans’ professional services ecosystem—lawyers, accountants and fund administrators with blockchain experience—complements the foundation model. The jurisdiction’s tax neutrality remains a material incentive for projects seeking capital efficiency without a domestic corporate tax burden, while its removal from the Financial Action Task Force grey list in October 2023 reinforced its compliance credentials.
By the end of 2024 the registry held over 1,300 Web3-related entities, with more than 400 additional registrations in early 2025. The ecosystem includes at least 125 active Web3 firms and at least 17 foundation companies reporting treasuries above $100 million, with aggregate management of an estimated $10 billion in crypto assets and tokens. This indicates the Caymans now hosts significant digital-asset economic infrastructure rather than only early-stage projects.
CARF is the Organisation for Economic Co-operation and Development framework that establishes standardized reporting and due-diligence obligations for crypto-asset service providers. It has been implemented in the Cayman Islands through new Tax Information Authority regulations effective January 1, 2026, with initial reporting cycles expected in 2027.
The regulations create a category of Reporting Crypto-Asset Service Providers (RCASPs) that captures exchanges, brokers and custodians and imposes mandatory reporting aligned with international transparency standards. A key operational distinction is that pure treasury or ecosystem-steward foundations that do not offer exchange, brokerage or custody services may not qualify as RCASPs and could avoid full CARF reporting status.
Practical implications include the need to reassess entity purpose, service scope, and counterparty relationships to determine CARF applicability. Entities falling within RCASP scope will need to build or outsource reporting, onboarding and recordkeeping capabilities ahead of the first reporting cycle.
The Cayman Islands’ recent surge in Web3 foundation registrations reflects a shift toward legally anchored, treasury-centric structures as international reporting standards take effect. This growth highlights how regulatory clarity and compliance readiness are now shaping jurisdictional choice for Web3 foundations.