Cayman Islands Web3 foundations rose 70% year-on-year, a surge unfolding alongside new Crypto-Asset Reporting Framework (CARF) rules. This rapid growth is concentrated in foundation companies and DAO-friendly structures following Cayman regulations published in November 2025 that take full effect on January 1, 2026.
Cayman’s Legal Structure and the Rise of Web3 Foundations
Registrations of Web3 foundation companies exceeded 1,300 by the end of 2024, with more than 400 new entries recorded during 2025. The jurisdiction now hosts over 125 active Web3 firms and at least 17 foundations managing treasuries above $100 million, highlighting significant institutional capital and operational scale. The Foundation Company structure allows entities to operate without members, limit liability, and enable token-holder governance, making it a preferred legal wrapper for DAOs.
Several jurisdictional features explain why growth continues despite tighter reporting requirements. Cayman remains tax-neutral with a 0% corporate tax rate and offers a mature legal and professional services ecosystem built for complex financial structures. Supervisory oversight by the Cayman Islands Monetary Authority (CIMA), alongside removal from the FATF grey list in October 2023, provides institutions with a stable compliance foundation. Market participants increasingly view regulatory clarity as a competitive advantage that reduces custody, counterparty and treasury risk. At the same time, analysts note that CARF implementation still presents interpretive challenges requiring additional legal and operational work.
Cayman authorities published CARF-aligned regulations in November 2025, with enforcement beginning on January 1, 2026. The framework expands due diligence and reporting requirements to Reporting Crypto-Asset Service Providers (RCASPs). Exchanges, trading platforms and custodial providers must identify users, establish tax residency, track transactions and submit annual reports to the Tax Information Authority. These measures build on international data-sharing standards and aim to increase the traceability of crypto activity.
Legal advisers indicate that Cayman’s current CARF interpretation primarily applies to active service providers rather than passive asset-holding structures. Passive foundations, protocol treasuries and investment funds that only hold crypto assets are likely excluded from the RCASP classification. This distinction determines which entities must rapidly upgrade KYC, tax-residency data collection and reporting infrastructure.
For treasuries and traders, the immediate operational priority is determining whether their Cayman structures qualify as RCASPs under the new framework. Entities that fall within scope must implement transaction monitoring, tax-residency verification and reporting systems before the January 2026 deadline.
The combination of a 70% rise in foundation registrations and the pending enforcement of CARF positions Cayman as a maturing institutional hub for Web3. The jurisdiction now reflects a convergence of DAO adoption, institutional capital and formal regulatory integration.
