In recent years, the Cayman Islands has quietly turned itself into a regional crypto hub, hosting over 125 Web3 companies. BeInCrypto conducted a deep dive into this local industry’s history, successful strategies, and growth.
Charlie Kirkconnell, CEO of the Cayman Enterprise City, agreed to an extensive interview with BeInCrypto, alongside some of his colleagues.
Cayman Islands: A New Crypto Hub?
Over the last 14 years, the Cayman Islands has operated three special economic zones, collectively known as Cayman Enterprise City (CEC).
SponsoredDespite the US’s recent attempts to become a regulatory paradise, the CEC currently hosts over 125 crypto and Web3 companies. So, what’s its secret?
To discuss Cayman’s rise to crypto prominence, BeInCrypto conducted an exclusive interview with Charlie Kirkconnell, who has been the CEC’s CEO since 2013:
“The last few years have been growth years for us. In 2017…we had a huge wave of businesses come through…with the ICO boom. Then came Covid, and once we reopened, we found that…there was a lot of pent-up demand. Things really started to take off…[and] that’s actually continued on an upward trajectory ever since,” he claimed
Specifically, Kirkconnell stated that the Cayman Islands reached a “tipping point” of crypto demand when the CEC solidified its reputation as a world-class Web3 hub.
Cayman was already an attractive destination for several reasons, like its established position in TradFi world-systems, but the CEC had to build these new bona fides from scratch.
Competition or Symbiosis?
Still, Kirkconnell disputed the notion that Cayman was competing with the US or other major world players for its status as a regional hub. Instead, he described it as a symbiotic relationship, with the CEC offering benefits to expansion and integration:
“Cayman makes sense as we do within the world of the funds industry. There’s onshore and offshore feeders into an investment fund…[and] that’s a sensible approach for projects in the crypto space as well,” he claimed.
“I think back to 2017, when some of these projects were trying to find attorneys locally that understood the [Web3] space. Fast forward to today, and all the bigger law firms on the island will have a group that focuses on crypto. There’s a level of expertise here that’s hard to find, very accessible, and very concentrated,” Kirkconnell added.
In other words, there was a snowball effect as Cayman’s crypto hub became more established, and a competitive outlook could’ve interfered with those advantages.
Sponsored SponsoredThere was already a pool of legal talent thanks to the islands’ strong international ties, but it took years of growth for that talent to build its own crypto expertise.
Although some major industry players have made a lot of hay about moving to destinations like El Salvador to escape perceived US regulatory unfriendliness, that isn’t always a productive mindset. Cayman’s path to crypto development has involved instead trying to maximize these mutual relationships.
Isabel Forde, the CEC’s Head of Global Mobility, illustrated this point quite cleanly. When asked if crypto’s decentralized structure helps firms based in Cayman interface with global markets, she claimed that it might not have any impact. The islands, after all, are already well-integrated with international finance. Kirkconnell elaborated on the point:
“In traditional finance, it’s a little bit more conservative. The decentralized nature of the space [is] an adventurous nature…[Crypto firms] themselves are more decentralized, their workforces are more decentralized…I think that has led people to…move to the Cayman Islands, [whereas] in traditional finance, that’s a lot slower to happen,” he claimed.
This perspective is actually quite revealing. The Web3 industry is famous for enabling cross-border payments, promoting connectedness and a global community, etc.
However, over 14 years of experience, these trends alone haven’t done much to build the Cayman Islands’ crypto hub. The crypto mindset powered this expansion, not blockchain technology.
SponsoredReplicating the Strategy
For obvious reasons, Kirkconnell was a little loath to suggest that enterprising new crypto hubs could successfully leverage the Cayman Islands’ approach. But that stance wasn’t just born of sentimentality for his long-term home. Factors like pre-existing US ties and TradFi infrastructure played a vital role in the CEC’s rise.
So, what would happen if a different jurisdiction tried to replace these intangible advantages with regulatory zeal? The CEC is an attractive destination in part because it prioritizes regulatory friendliness and clarity.
However, that friendliness can’t sacrifice oversight, or disaster could follow.
Kirkconnell said that the Cayman Islands has taken a “measured and conservative” approach to building up crypto regulation. Web3 is frequently high-risk, but low-risk successes need to accumulate if a hub is to be sustainable. In short, the CEC required time, and the industry isn’t always used to playing cautiously:
“You want to build…something of a source of pride for the jurisdiction, not an embarrassment. Sometimes these things happen. Trying to go too fast and taking too many risks might be a pitfall that other jurisdictions should watch out for. It’s taken a number of years and a lot of hard work to get to where we are,” Kirkconnell remarked.
Although he welcomed other regions to take up the challenge, Kirkconnell affirmed that the CEC will continue working hard to remain competitive, at least as far as the US-centric crypto market is concerned.
In this aside, he did show the place where symbiosis and competition overlap. The Cayman Islands aims to assist crypto companies with American ties, not displace the US as a hub.
Sponsored SponsoredHowever, this collaborative relationship doesn’t need other regions trying to syphon off its capital and talent pipeline.
Prospective other hubs could attempt to set themselves up in other regional hotspots, like Singapore and the UAE have done. Even still, the US is unmatched as a global crypto powerhouse.
Neither Europe, nor China, nor any other world power has the inclination or capacity to rival the US in Web3.
Long-Term Benefits
Still, even if the process has been long and difficult, Kirkconnell stressed that the results have been worth while. It was a slow beginning, but the Cayman Islands experienced a snowball effect, and the crypto hub is fully established.
Today, there’s no preferred type of Web3 business to set up operations there, as the CEC has an organic and vibrant community:
“We’ve got businesses at all stages and of all sizes. Some of the projects are startup entities, and some of them are [globally] established already. Cayman is a great platform for whatever your project is doing, and I think the level of expertise, infrastructure, and regulatory environment lend itself to a variety of different projects,” he claimed.
Kirkconnell finished by inviting any prospective crypto firms to try Cayman out for themselves. He claimed that the CEC can set projects up with licensing, visas, office space, and more within four to six weeks.
Hopefully, this business community can continue innovating for years to come.
