Web3 firms are flocking to Cayman Islands to set up headquarters in the tax-neutral region. The British Overseas Territory located in the Western Caribbean Sea has recorded a 70 percent year-on-year spike in foundation Web3 company registrations.
The figure was shared by the Cayman Islands General Registry on Tuesday, December 2. It noted that in the last one year, 1,300 Web3 companies have filed legal registrations to operate from the region. This year so far, 400 new companies working on blockchain-based services and decentralized autonomous organizations (DAOs) have established their presence in the Cayman Islands.
“The Cayman Islands’ appeal extends beyond liability protection. The jurisdiction offers tax neutrality, a sophisticated legal infrastructure familiar to institutional investors, regulatory clarity for digital assets, and a well-established ecosystem of professional service providers experienced in blockchain technology,” said a statement shared with CoinHeadlines by the regional financial services industry association, Cayman Finance.
As per a November report by Tracxn, Polygon and Bitget alongside Chainlink and Wormhole are among Web3 firms that are based in the Cayman Islands.
Under its tax neutral ecosystem, Cayman Islands do not levy direct taxes on individuals or corporate entities. It neither imposes tax on capital gains nor does it levy taxes on inheritance, gifts, and properties. The region, does, however imposes duties and annual fees on imports, stamp duties, real estate sales, and mortgages.
Haymond Rankin from Cayman Finance attributed the spike in Web3 companies setting shops in the region to its blend of modern legislation and regulatory clarity.
“Cayman foundation companies give DAO communities and Web3 projects the operational flexibility they value, together with the legal certainty global participants expect. This is an essential combination for Web3 projects to move from experimentation to long‑term stewardship of significant treasuries,” the associate director of virtual assets at Cayman Finance said commenting on the development.
In Cayman Islands, the Virtual Assets Service Providers Act oversees crypto activities. It instructs related companies to acquire proper licensing from the Cayman Islands Monetary Authority (CIMA). The aim is to curb the exploitation of crypto assets to fund terrorism and money laundering among other possible crimes.
The region has also reportedly issued guidelines around the international reporting of crypto information to stay in alignment with the ongoing global crypto regulatory efforts.