The Cayman Islands have witnessed a significant surge in founding formations, with a remarkable increase of over 70% year-on-year, exceeding 1,300 by the end of 2024. This trend is expected to continue, with more than 400 additional registrations in early 2025, as reported by Cayman Finance. The foundation model has become the preferred choice for decentralized autonomous organizations (DAOs) seeking legal personality, particularly in the wake of the Samuels vs. Lido DAO court ruling, which treated an unincorporated DAO as a general partnership.
Shift to Offshore Structures
The ruling’s signaling effect has pushed governance projects toward jurisdictions with a more obvious separation between contributors and protocol activities. The Cayman Islands, long a global investment fund hub, has absorbed much of these inflows. Haymon Rankin, Deputy Director at Cayman Finance, stated, “We’re one of the largest jurisdictions for funds to come here and form, and people have just been – there’s over 30,000 funds right now, to put that in context. I think the only jurisdiction ahead of us is Delaware.” Major industry players, including the OpenSea Foundation and affiliates supporting cryptocurrency-related ETFs, have been attracted to the Cayman Islands.
Liability Architecture
Industry experts attribute this trend to the stability provided by the jurisdiction’s incorporation 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 post-Samuels shift reflects a broader recalibration of governance risk rather than simple “regulatory arbitrage.” Unwrapped DAOs, which operate without legal personality, are increasingly coming under scrutiny from courts, insurers, and centralized service providers.
Foundations provide a predictable corporate 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 general partnership. The Cayman Islands’ Virtual Asset Service Providers Act provides additional clarity for companies providing exchange, custody, or underwriting services. As a result, the jurisdiction has become the default choice for governance entities seeking legal isolation.
US Repositioning
As capital and governance structures have moved offshore in 2023 and 2024, U.S. policymakers have begun to take a more accommodative stance. The Trump administration has adopted a pro-crypto stance and is focused on strengthening American leadership in the emerging industry. This is evidenced by various efforts, including the White House’s endorsement and introduction of the concept of a strategic Bitcoin reserve, as well as other moves such as the appointment of individuals who advocate for cryptocurrencies.
While these moves do not resolve regulatory ambiguity, they signal an intention to stabilize a market that has increasingly shifted offshore. As a result, the adjustment of the company’s strategy has already begun. Galaxy Digital’s relocation from the Cayman Islands to Delaware in mid-2025 shows how access to U.S. capital markets can offset the governance benefits of an offshore domicile.
Two-Part Operating Model
Even as conditions improve in the United States, the crypto market is fragmenting into different jurisdictions. Crypto platforms are increasingly separating governance and commercial operations to address inconsistent regulatory systems. Foundations are typically established in the Cayman Islands 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 seeking licenses in jurisdictions with specialized regulatory regimes.
This geographic distribution allows projects to delineate governance responsibilities in the Caribbean while attracting users and liquidity in Asia and the Middle East. The trend is reflected in growing requests for “digital asset treasury companies,” or DATs, that manage protocol reserves, liquidity, and fiat operations. These structures are often paired with U.S. or Asian operating companies, creating cross-border arrangements that separate governance, compliance, and commercial functions.
Open Question for the New Cycle
Whether the United States can meaningfully repatriate foundation-level activities remains uncertain. Offshore jurisdictions still offer clearer liability protections, simpler governance mechanisms, and more predictable tax treatment. However, the US offers unprecedented access to public markets, banking, and capital formation, but its policy direction remains dependent on political cycles and incomplete regulatory reforms.
Crypto companies are currently hedging their bets. Their operational units are relocating to Delaware, Hong Kong, and Dubai. At the same time, their governance structures remain anchored in George Town and Zug. For more information, visit https://cryptoslate.com/crypto-cayman-foundations-surge-70-as-a-new-court-ruling-exposes-tokenholders-to-devastating-personal-liability-risks/
