An even stronger foundation for web3? Cayman company law gives more flexibility for web3 projects

The Cayman Islands, already a premier offshore jurisdiction for digital asset innovation, has recently amended the Companies Act, effective from January 1, 2026, introducing flexibility that directly benefits web3 projects, particularly through the ability for Cayman foundation companies to convert into exempted companies.

The Foundation Company Conversion Advantage

Under the new legislation, foundation companies incorporated under the Foundation Companies Act can now convert to exempted companies through a special resolution. This conversion mechanism represents a significant evolution in corporate structuring options for blockchain protocols, DAOs, and decentralized finance projects that have matured beyond their initial governance phase.

Foundation companies have become the gold standard for wrapping DAOs and Web3 projects because they offer liability protection without requiring shareholders, aligning perfectly with decentralized governance models. However, as projects evolve and commercial needs change, the ability to convert to an exempted company structure provides critical flexibility for scaling operations, attracting traditional investment, or restructuring for different regulatory requirements.

Why This Matters for Web3?

The conversion flexibility addresses several key challenges. First, it allows projects to adapt their legal structure without being locked into a perceived single structure.  The tax-neutral position of Cayman means that such changes don’t have the same complexity as structuring changes in other jurisdictions if needed. While it might be an edge case, an early-stage project can launch with a foundation company structure that prioritizes community governance and decentralization, then if developments mean it makes more sent to move to a structure with ownership, for investment, or even if it becomes possible in future for tokens to represent ownership, then a seamlessly transition to an exempted company would assist.

This flexibility enhances the Cayman Islands’ competitive position against other emerging crypto-friendly jurisdictions, which still face significant structure lock-in and expensive costs to change any part of the structure.  Projects can have some more confidence that they don’t have as much ‘lock in’ and committing to the “right” structure at inception.

The Competitive Edge

The Cayman Islands’ combination of sophisticated legal infrastructure, absence of taxation, robust

regulatory VASP framework and strong CIMA oversight, and now added structuring flexibility continue to make Cayman a preferred jurisdiction for web3 innovation.

As the digital asset industry continues to mature, jurisdictions that provide both regulatory clarity and structural flexibility will attract the most innovative projects. The Cayman Islands’ latest amendments demonstrate why it remains the jurisdiction of choice for serious web3 builders.