The Cayman Islands are solidifying their position as a global hub for Web3 foundations, witnessing a remarkable 70% year-on-year surge in legal entity registrations. This growth is primarily driven by the increasing popularity of decentralized autonomous organizations (DAOs) and other Web3 projects seeking a jurisdiction that offers both legal clarity and operational flexibility.
Figures from the Cayman Islands General Registry indicate a substantial increase in foundation company registrations. By the end of 2024, over 1,300 foundation companies were registered, a significant jump from the 790 registered the previous year. This trend has continued into 2025, with over 400 new foundation companies registered. Foundation companies are commonly used to provide legal "wrappers" for DAOs or to act as stewards for ecosystems within the Web3 space.
Several factors contribute to the Cayman Islands' appeal. Foundation companies offer a balance between the flexibility required for DAO operations and formal legal protections, shielding token holders from personal liability for a DAO's obligations or legal claims. The jurisdiction also provides tax neutrality, a sophisticated legal infrastructure, regulatory clarity for digital assets, and a well-established ecosystem of professional service providers experienced in blockchain technology.
Many of the world's largest Web3 projects are now registered in the Cayman Islands using foundation companies. There are at least 17 foundation companies registered in the Cayman Islands, each with a treasury exceeding $100 million. Collectively, these foundations manage assets worth approximately $10 billion.
However, the Cayman Islands are also taking steps to enhance regulatory oversight of the crypto space. New regulations have been published to implement the Crypto-Asset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS). These regulations, which were gazetted on November 27, 2025, establish the domestic framework needed to apply CARF from January 1, 2026. The amendments to the CRS regime include additional digital financial instruments.
The introduction of CARF and the amended CRS is intended to prevent the use of virtual assets for tax avoidance and evasion. CARF establishes reporting and due diligence obligations for crypto-asset service providers operating in or from the Cayman Islands. These entities are required to collect, verify, and report information related to the tax residence of crypto-asset users and controlling persons, as well as information on relevant transactions. Relevant transactions include exchanges between crypto-assets and fiat currencies, exchanges between different crypto-assets, and transfers of crypto-assets.
The regulations also require service providers to establish written policies and procedures, obtain self-certifications from users, maintain records for at least six years, and submit annual returns to the Tax Information Authority. The Cayman Islands will conduct its first exchanges with partner jurisdictions in 2027.
Premier and Minister of Financial Services André Ebanks stated that publishing these regulations is an important step in ensuring that the Cayman Islands continues to meet global tax transparency standards. By implementing CARF alongside the updated CRS, the Cayman Islands aims to provide a clear, modern framework that supports international cooperation while giving industry certainty on their obligations.
While the implementation of CARF will introduce new compliance requirements for crypto-asset service providers, the Cayman Islands remains an attractive jurisdiction for Web3 foundations. The jurisdiction's existing legal framework, tax neutrality, and experienced professional service providers continue to make it a popular choice for DAOs and other Web3 projects.
