Recent data indicates a 70% year-on-year rise in registrations of foundation companies in the Cayman Islands, with over 1,300 registered by the end of 2024 and more than 400 new entries recorded in 2025.
These entities are increasingly being utilized as legal frameworks for decentralized autonomous organizations (DAOs) and as custodians for significant Web3 initiatives.
A news release from Cayman Finance reports that numerous prominent Web3 ventures are now established in the Cayman Islands, including at least 17 foundation companies boasting treasuries exceeding $100 million.
Why DAOs are choosing Cayman
The Cayman foundation company has risen as the preferred mechanism for DAOs that require contract signing, contributor hiring, IP ownership, and regulatory interactions, all while protecting tokenholders from personal liability regarding the DAO’s responsibilities.
The legal wake-up call arrived for many communities in 2024 with Samuels v. Lido DAO, where a US federal judge determined that an unwrapped DAO could be classified as a general partnership under California law, potentially exposing members to personal liability.
The Cayman foundation company addresses this issue by providing a distinct legal entity capable of owning assets and entering into contracts, ensuring tokenholders are not considered partners by default.
With added tax neutrality, a legal framework familiar to institutional investors, and a network of companies specializing in Web3 treasuries, it’s evident why numerous projects are discreetly relocating their foundations to Grand Cayman.
In contrast, policymakers elsewhere have made grand promises but have produced inconsistent results. US President Donald Trump has often vowed to make the United States the “crypto capital of the planet,” yet at the entity level, only a few states explicitly acknowledge DAOs as legal entities.
Switzerland continues to be the quintessential onshore foundation center for Web3, with the Crypto Valley region now accommodating over 1,700 active blockchain firms, reflecting an increase of over 130% since 2020, with foundations and associations making up a larger part of newly established entities.
Related: Switzerland’s Crypto Valley hits $593B with 17 unicorns in 2024
From light-touch haven to compliance player
The increase in Web3 foundations aligns with a transformation in Cayman’s regulatory stance — with the adoption of the Organisation for Economic Co-operation and Development’s Crypto-Asset Reporting Framework (CARF), which the Cayman Islands has implemented through new regulations from the Tax Information Authority effective January 1, 2026.
CARF will impose due diligence and reporting obligations on Cayman “Reporting Crypto-Asset Service Providers” (those that exchange crypto for fiat or other cryptocurrencies, run trading platforms, or provide custodial services), mandating them to collect tax-residence data from users, monitor pertinent transactions, and submit annual reports to the Tax Information Authority.
Legal experts indicate that CARF reporting, as currently interpreted, applies to relevant crypto-asset service providers, including exchanges, brokers, and dealers, which likely exempts structures that merely hold crypto assets, such as protocol treasuries, investment funds, or passive foundations.
“The key question is whether your entity, as a business, provides a service effectuating exchange transactions for or on behalf of customers, including by acting as a counterparty or intermediary or by making available a trading platform.”
In practice, this means that many purely treasury or ecosystem-steward foundations should be able to enjoy the benefits of Cayman’s legal clarity and tax neutrality without being compelled into comprehensive reporting status, provided they do not engage in exchange, brokerage, or custody services.
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