Cayman’s path to integration with Web3, DAOs and DeFi companies

Source: AiYing Compliance

The Cayman Islands is shining brightly in the digital revolution, with a significant increase in the number of Web3 businesses established in recent years. If the current pace of development is maintained and legislation continues to be optimized, there will be no limit to the speed of expansion. This article explores the key factors driving this growth and explains why the region is attractive to companies involved in Web3 and virtual assets.

For more than 30 years, the Cayman Islands has been a global leader of offshore investment funds, including mutual funds and private equity funds, and its reputation for excellence is due to:

• Innovation. Legislative support;

• No tax and exchange controls;

• A proven and professional service provider that has been around for a long time .

These ensure responsible supervision and regulation of investors and provide investors with a safe and trustworthy environment

In the dynamic Web3 space, the Cayman Islands stands out with its forward-looking legislation, particularly the Virtual Asset Service Providers Act (VASPA), an innovative law that provides support for the growth of Web3, cryptocurrency and other virtual asset companies. Momentum. VASPA has established a strict regulatory framework overseen by the Cayman Islands Monetary Authority (CIMA) to provide a safe and transparent environment for these businesses to grow.

Just this month the dYdX Foundation was announced. The X platform issued a statement stating that the dYdX community has voted to support the transformation of the dYdX Operational Trust Fund into the Cayman Islands Foundation Company, with a final support rate of 93.1%.

Their next steps:

• Establish the dYdX Operations Foundation (DOF) as a foundation company in the Cayman Islands and appoint key personnel;

• < p>Draft the memorandum and charter of DOF, and grant effective control to the dYdX community through dYdX consensus;

• End the trust period, thereby terminating DOT;

• The trustee needs to perform relevant transfer operations, namely multi-party signatures, domain names, accounts, contracts, etc.

In addition. The establishment of special economic zones such as the Cayman Enterprise City (CEC) and the introduction of the Special Economic Zone Law have also provided impetus for the development of Web3 in the Cayman Islands.

What is the best structure for setting up a Web3 business?

Choosing the right company structure is crucial when setting up a Web3, DAO or DeFi business, and the Cayman Islands offers a variety of flexible options. . The following are the three most popular structures among Web3 companies in the Cayman Islands:

1. Foundation companies: Foundation companies are DAOs, Web3 and De-Fi enterprises first choice. A few key reasons to choose it include:

• Liability Protection: Foundation companies provide strong stakeholder protections against liability Personal Responsibility.

• Flexibility of trust: This structure has the adjustability of a trust and provides a flexible framework for business operations.

• No shareholders exist: Unlike traditional companies, foundation companies do not have shareholders and support a more decentralized operating model.

• Focus on purpose: The foundation company will focus on its set purpose, consistent with the unique goals and functions of the Web3 enterprise.

• Exempt LLC: Many Web3 and virtual asset companies choose an exempt LLC as a token issuer because it is a tax-neutral vehicle. In addition, the Cayman Islands special economic zone company is also a form of exempted limited liability company established in the special economic zone and enjoys specific preferences.

2. Funds: The Cayman Islands is home to a variety of regulated mutual funds and private equity funds, which are suitable for Web3 and Blockchain applications.

• Mutual Funds: Must be under the supervision of the Cayman Islands Monetary Authority (CIMA), such as registered mutual funds Funds in which investors may purchase an initial minimum equity interest of $100,000 or have their equity interests listed on an approved stock exchange.

• Private EquityFunds: Private funds are regulated under the Private Funds Act and operate as closed-end funds.

In summary, the Cayman Islands continues to maintain its leadership in Web3 and virtual asset expansion. Whether through foundation companies, diverse fund structures, or through the advantages offered by special economic zones, choosing the appropriate legal framework strategically makes the Cayman Islands an ideal location to establish and nurture Web3, DAOs and De-Fi businesses. For those seeking a vibrant environment and legal infrastructure conducive to digital innovation, the Cayman Islands is undoubtedly a future hotspot for Web3.