Cayman Islands foundation formations increased more than 70% year-on-year to more than 1,300 by the end of 2024, continuing a multi-cyclical shift to offshore construction.
According to a report from Cayman Finance, data from early 2025 showed that more than 400 additional registrations indicate the trend has continued, despite recent moves by the United States to recast itself as a competitive jurisdiction for digital asset companies.
The foundation model has become the preferred packaging for decentralized autonomous organizations (DAOs) seeking legal personality Samuels vs. Lido DAO. This California ruling treated an unincorporated DAO as a general partnership.
Although the decision had limited precedential weight, its signaling effect pushed governance projects toward jurisdictions with clearer separation between contributors and protocol activities. Cayman, long a global center for investment funds, has absorbed much of that flow.
Haymon Rankin, deputy director at Cayman Finance, said:
“We’re one of the largest jurisdictions where funds are coming here and setting up shop there, and people were just – there’s over 30,000 funds right now to put it in context. I think Delaware is the only jurisdiction ahead of us. So we’re really punching above our weight.”
Indeed, Cayman has attracted major industry entities, including the OpenSea Foundation and subsidiaries that support cryptocurrency-linked ETFs.
Industry experts attribute this trend to the stability provided by the jurisdiction’s foundation regime, which allows projects to own intellectual property, manage multi-signature treasuries, and adopt purpose-driven governance frameworks without exposing token holders to personal liability.
The liability architecture
The post-Samuels shift reflects a broader recalibration of governance risk rather than simple ‘regulatory arbitrage’.
Unpackaged DAOs that operate without legal personality are increasingly scrutinized by courts, insurers and centralized service providers.
Foundations provide a predictable business interface without requiring token holders to act as members or shareholders, reducing the likelihood that plaintiffs or regulators can argue that protocol participants form a blanket partnership.
Rankin said Cayman’s Virtual Asset Service Providers Act provides additional clarity for companies offering exchange, custody or issuance services. He said:
“Now it is [a VASP Act]and it really regulates the industry and tells you exactly what you need to do to operate legitimately.”
As a result, the jurisdiction has become a default choice for governance entities seeking legal insulation.
The US is repositioning itself
As capital and governance structures migrated abroad over the course of 2023 and 2024, U.S. policymakers have begun a shift toward a more accommodative stance.
The Trump administration has embraced a pro-crypto stance and is focused on strengthening US leadership in the emerging industry.
This is evident from the various efforts, including the White House’s approval and introduction of the concept of a strategic Bitcoin reserve, as well as other steps such as the appointment of pro-crypto individuals.
While these steps do not resolve regulatory ambiguities, they do indicate an intent to stabilize a market that has increasingly moved offshore.
As a result, the business strategy has already started to adapt. Galaxy Digital’s move from the Cayman Islands to Delaware in mid-2025 illustrates how access to US capital markets can offset the governance advantages of offshore domicile.
Galaxy’s move doesn’t signal a broader turnaround in the industry, but it does offer an early indication that a less hostile regulatory environment could draw some activity back to the mainland.
At the same time, financial regulators such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have also taken steps to soften their approach.
For context, the SEC launched the “Crypto 2.0” initiative earlier this year, which led to the closure of several investigations into crypto companies and the development of a comprehensive, clear regulatory framework for crypto assets.
These measures are still in their early stages and require formal regulation, but they reflect a shift away from the aggressive enforcement posture that defined the previous administration.
At the same time, regulatory relief has also come through the Corporate Transparency Act.
Earlier this year, the Treasury Department announced that it would not impose sanctions for reporting beneficial ownership by domestic companies, while proposing new rules that would limit the scope of the CTA to foreign reporting entities.
While not crypto-specific, the change reduces the compliance burden often cited by small digital asset startups operating in the US
A split business model emerges
Even as conditions improve in the United States, the crypto market is fragmenting into jurisdictional layers.
Crypto platforms are increasingly splitting governance and commercial activities to navigate inconsistent regulatory regimes.
Foundations are commonly established in Cayman or Switzerland to hold intellectual property, manage token treasuries, and formalize protocol oversight. At the same time, exchanges, market-oriented subsidiaries and infrastructure providers are pursuing licenses in jurisdictions with specialized regulatory regimes.
For context, Hong Kong’s Securities and Futures Commission has expanded its licensing program for virtual asset trading platforms, attracting exchanges that focus on Asia-Pacific capital flows. Dubai’s Virtual Assets Regulatory Authority has issued around 30 licenses by mid-2025, focusing on custodians, OTC desks and derivatives platforms.
This geographic spread allows projects to shield management liability in the Caribbean while simultaneously acquiring users and liquidity in Asia and the Middle East.
Rankin said the trend is reflected in growing demand for “digital asset treasury companies” (DATs), which manage protocol reserves, liquidity and fiat operations.
These structures often involve US or Asian operating companies, creating multi-jurisdictional arrangements that separate governance, compliance and commercial functions.
An open question for the new cycle
Whether the United States can meaningfully repatriate foundation-level activities remains uncertain. Offshore jurisdictions continue to offer clearer liability shields, simpler governance mechanisms and more predictable tax treatment.
However, the US offers unparalleled access to public markets, banking and capital formation, but policy direction remains dependent on political cycles and incomplete regulatory reforms.
For now, crypto companies are hedging. Their operating entities are moving towards Delaware, Hong Kong and Dubai. At the same time, their governance structures remain anchored in George Town and Zug.