Cayman Islands Foundation Companies Gain Traction for DAOs and Web3 Projects
New figures indicate a significant 70% year-on-year increase in Cayman Islands foundation company registrations. By the end of 2024, more than 1,300 companies were registered, with over 400 new registrations already recorded in 2025. These structures are increasingly being utilized as legal wrappers for decentralized autonomous organizations (DAOs) and as ecosystem stewards for major Web3 projects. According to a press release from Cayman Finance, many of the world's largest Web3 projects are now registered in the Cayman Islands, with at least 17 foundation companies possessing treasuries exceeding $100 million.
Reasons for DAO Preference for Cayman Islands
The Cayman foundation company has emerged as a preferred legal tool for DAOs. These organizations require the ability to sign contracts, hire contributors, hold intellectual property, and interact with regulators. Crucially, the foundation company structure shields tokenholders from personal liability for the DAO's obligations. A significant legal development for many communities occurred in 2024 with the case of Samuels v. Lido DAO. In this instance, a U.S. federal judge ruled that an unwrapped DAO could be treated as a general partnership under California law, potentially exposing participants to personal liability.
The Cayman foundation company is designed to address this gap by offering a separate legal personality. This allows the foundation to own assets and sign agreements. Simultaneously, it provides tokenholders with assurance that they are not automatically considered partners.
In addition to its legal advantages, the Cayman Islands offer tax neutrality. The jurisdiction also possesses a legal framework that is familiar to institutional allocators. Furthermore, an established ecosystem of firms specializing in Web3 treasuries exists. These factors collectively explain why an increasing number of projects have quietly relocated their foundations to Grand Cayman. In contrast, policymakers in other regions have made ambitious promises but delivered limited tangible solutions. For example, Donald Trump has repeatedly pledged to transform the United States into the "crypto capital of the planet." However, at the entity level, only a few states explicitly recognize DAOs as legal persons. Switzerland remains a well-established hub for Web3 foundations, with its Crypto Valley region hosting over 1,700 active blockchain firms. This represents a growth of more than 130% since 2020, with foundations and associations constituting a growing proportion of new structures.
Evolution from a Light-Touch Haven to a Compliance-Focused Jurisdiction
The substantial increase in Web3 foundations coincides with a notable shift in the Cayman Islands' regulatory approach. This change is driven by the implementation of the Organisation for Economic Co-operation and Development’s Crypto-Asset Reporting Framework (CARF). The Cayman Islands have incorporated CARF into new Tax Information Authority regulations, which became effective on January 1, 2026. CARF mandates due diligence and reporting obligations for Cayman "Reporting Crypto-Asset Service Providers." These entities, which include those that exchange crypto for fiat or other crypto, operate trading platforms, or provide custodial services, will be required to collect tax-residence data from users, track relevant transactions, and submit annual reports to the Tax Information Authority.
Legal professionals have observed that CARF reporting, under its current interpretation, applies to relevant crypto-asset service providers such as exchanges, brokers, and dealers. This suggests that structures primarily focused on holding crypto assets, including protocol treasuries, investment funds, or passive foundations, may be exempt from these reporting requirements.
“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 practical terms, this means that many pure treasury or ecosystem-steward foundations should be able to continue benefiting from the Cayman Islands' legal certainty and tax neutrality. This is provided they are not engaged in the business of operating exchange, brokerage, or custody services, thereby avoiding full reporting status.