The Cayman Islands has recorded a 70% year-on-year increase in Web3 foundation company registrations, rising from about 765 entities at the end of 2023 to over 1,300 by the end of 2024, with an additional 400+ recorded in early 2025. This rapid expansion coincides with the adoption of the OECD Crypto-Asset Reporting Framework (CARF) and reflects a clear shift toward formal legal structures and anticipatory compliance.
Why Web3 Foundations Are Migrating to Cayman
Foundation Company structures have become the preferred legal vehicle for many Web3 projects. A Foundation Company is a limited-liability, memberless entity that can hold assets, enter contracts and shield tokenholders from unlimited personal liability. Cayman’s tax-neutral environment and flexible company law have attracted recognized ecosystem entities such as the Arbitrum Foundation, Babylon Foundation and Metaplex Foundation to Grand Cayman.
High-profile court decisions that treated unstructured DAOs as general partnerships accelerated demand for formal legal structures after 2024. The combined effect of rising legal risk and a desire for jurisdictional certainty triggered a pronounced “flight to clarity” among founders, treasuries and institutional counterparties.
The Crypto-Asset Reporting Framework (CARF) is an international standard designed to enhance cross-border tax information exchange for crypto transactions. Under CARF, Reporting Crypto-Asset Service Providers (CASPs) that provide exchange, brokerage or dealer services will face new due-diligence and reporting obligations. Entities that merely hold crypto assets, such as protocol treasuries, investment funds or passive foundations, are likely to remain outside the full reporting scope if they do not provide exchange, custody or brokerage services.
The Cayman Islands implemented CARF through Tax Information Authority regulations gazetted on 27 November 2025. In-scope firms will be required to collect tax-residency data, retain transaction records and submit annual reports to the Tax Information Authority. These rules will compel VASP operators and relevant service providers to strengthen KYC, AML and secure reporting infrastructure, increasing operational rigor across the sector.
Operational consequences for VASPs and custodians include significant one-off and recurring investments in data systems, compliance staffing and internal process audits. Cayman’s early adoption of CARF, following its removal from the FATF grey list in October 2023, positions the jurisdiction as an early participant in the global transparency regime.
The surge in Cayman foundation registrations reflects a strategic industry response to rising regulatory expectations. CARF has acted as a catalyst rather than a deterrent for entity formation, with 1 January 2026 now set as the effective compliance milestone that will shape priorities for treasuries, custodians and VASP operators.
