In recent years, the Cayman Islands has quietly become a regional crypto hub, now home to over 125 Web3 companies. BeInCrypto has conducted an in-depth investigation into the history, success strategies, and growth of the local industry.
Charlie Kirkconnell, CEO of Cayman Enterprise City, agreed to an in-depth interview with BeInCrypto along with some of his colleagues.
Cayman Islands: A New Cryptocurrency Hub?
For the past 14 years, the Cayman Islands has operated three special economic zones, collectively known as Cayman Enterprise City (CEC).
Despite recent efforts to become a US legal haven , the CEC is now home to over 125 crypto and Web3 companies. So, what’s the secret?
To discuss Cayman’s rise in the crypto space, BeInCrypto conducted an exclusive interview with Charlie Kirkconnell, who has served as CEO of CEC since 2013:
“The last few years have been a growth period for us. In 2017… we saw a huge influx of businesses… with the ICO wave. Then Covid came, and when we reopened, we realized… there was huge pent-up demand. Everything really took off… [and] has continued to grow ever since,” he asserted.
Specifically, Kirkconnell said the Cayman Islands has reached a “tipping point” in crypto demand as the CEC cements its reputation as a world-class Web3 hub.
Cayman was Capital an attractive destination for many reasons, such as its existing position in the traditional finance ecosystem (TradFi), but CEC had to build this new reputation from scratch.
Competition or symbiosis?
Kirkconnell, however, rejects the notion that Cayman is competing with the US or other powers for regional hub status. Instead, he XEM it as a symbiotic relationship, with the CEC benefiting expansion and integration:
“Cayman makes sense, just like we do in the fund world. There are onshore and offshore flows into a Capital … [and] that’s a sensible approach for crypto projects as well,” he said.
“I remember back in 2017, when some projects were trying to find local lawyers who understood the [Web3] space. Fast forward to today, every major law firm on the island has a crypto-focused team. There is a level of expertise that is hard to find, very accessible, and highly focused,” Kirkconnell added.
In other words, there is a snowball effect as Cayman’s crypto hub becomes more established, and an overly competitive mindset could undermine those advantages.
Thanks to its strong international connections, the island already has a strong legal force, but it took years of development for this force to build up its own expertise in crypto.
While some big names have made a big deal about moving to places like El Salvador to avoid unfriendly US regulations, that mindset doesn’t always work. The Cayman Islands’ approach to crypto development is focused on maximizing mutually beneficial relationships.
Isabel Forde, Head of Global Mobility at CEC, illustrates this quite well. When asked whether the decentralized structure of crypto helps Cayman-based companies connect to global markets, she said it probably won’t make a difference. After all, the islands are already deeply connected to international finance. Kirkconnell elaborated:
“In traditional finance, things are a bit more conservative. The decentralized nature of the sector is risky… [Crypto companies] are more decentralized themselves, the workforce is more decentralized… I think that has led a lot of people… to move to the Cayman Islands, [whereas] in traditional finance, it has been a lot slower,” he said.
This perspective is actually quite revealing. The Web3 industry is known forenabling cross-border payments , fostering global connectivity and community, etc.
However, over 14 years of experience, these trends alone have done little to build the Cayman Islands’ crypto hub. It is the crypto mindset that has driven this expansion, not blockchain technology.
Copy strategy
For understandable reasons, Kirkconnell is reticent to suggest that emerging crypto hubs could successfully adopt the Cayman Islands’ approach. But that’s not just due to his long-standing sentiment. Factors like the existing US connection and TradFi infrastructure have played a key Vai in CEC’s rise.
So what happens if another jurisdiction tries to replace these intangible advantages with regulatory ferocity? Part of the appeal of the CEC is that it prioritizes regulatory friendliness and clarity.
However, that friendliness cannot come at the expense of supervision, or disaster can strike.
Kirkconnell said the Cayman Islands has taken a “measured and cautious” approach to developing a regulatory framework for crypto. Web3 is often high-risk, but low-risk successes need to be accumulated if the hub is to be sustainable. In short, CECs take time, and the industry is not always accustomed to going slow and steady:
“You want to build… something that the jurisdiction is proud of, not ashamed of. Sometimes things go wrong. Trying to move too fast and taking too many risks can be a trap that other jurisdictions should be wary of. It took us many years and a lot of hard work to get to where we are,” Kirkconnell said.
While welcoming other regions to try, Kirkconnell asserted that the CEC will continue to work to stay competitive, at least in the US-centric crypto market.
In doing so, he also points out the intersection of symbiosis and competition. The Cayman Islands’ goal is to support crypto companies with US connections, not to replace the US as a hub.
However, this partnership does not require other regions to seek to divest Capital and human resources from this ecosystem.
Other potential hubs may look to set up shop in other regional hotspots, as Singapore and the UAE have done . Still, the US remains unrivaled as a global crypto powerhouse .
Neither Europe, China nor any other power has the will or capacity to compete with the US in Web3.
Long-term benefits
Still, while the process has been long and arduous, Kirkconnell stresses that the results have been worth it. It started slowly, but the Cayman Islands has experienced a “snowball effect,” and the crypto hub is now firmly established.
There is currently no particular type of Web3 business that is favored here, as CEC has a vibrant and naturally growing community:
“We have companies of all stages and sizes. Some are startups, others are already [globally] recognized. Cayman is a great base for any project you have, and I think the level of expertise, infrastructure and regulatory environment here is suitable for a wide range of projects,” he said.
Kirkconnell concluded by inviting prospective crypto companies to experience Cayman for themselves. He said the CEC can help with licensing, visas, office space and more for a project within four to six weeks.
Hopefully this business community will continue to innovate for many years to come.
