In recent years, the Cayman Islands has quietly become a regional cryptocurrency hub, with over 125 Web3 companies based there. BeInCrypto has delved into the history, successful strategies, and growth of this local industry.
Cayman Enterprise City CEO Charlie Kirkconnell, along with several colleagues, agreed to a wide-ranging interview with BeInCrypto.
Cayman Islands: A new crypto hub?
For the past 14 years, the Cayman Islands has operated three special economic zones, collectively known as Cayman Enterprise City (CEC).
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Even though the US has recently become a regulatory haven, the CEC is currently home to over 125 crypto and Web3 companies. So what’s the secret?
To discuss Cayman’s growing reputation in crypto, BeInCrypto conducted an exclusive interview with Charlie Kirkconnell, CEO of CEC since 2013.
“The last few years have been years of growth for us. In 2017…with the ICO boom…we had a big wave of business. Then COVID-19 came along, and once we reopened…we saw there was a lot of pent-up demand. Things really started to take off…(and) we’ve actually been on an upward trajectory ever since,” he asserted.
Specifically, Kirkconnell said the Cayman Islands reached a “tipping point” in cryptocurrency demand as the CEC cemented its reputation as a world-class Web3 hub.
Cayman was already an attractive destination for several reasons, including its established position in the TradFi world system, but CEC needed to build these new true facilities from the ground up.
Competition or symbiosis?
Still, Kirkconnell disputed the idea that Cayman is competing with the United States or other major world powers for status as a regional center. Rather, he described it as a symbiotic relationship where CEC benefits expansion and consolidation.
“Cayman makes sense as it does in the fund industry world. There are onshore and offshore feeders for investment funds… (and) it is also a sensible approach for projects in the crypto space,” he argued.
“I think back to 2017, when some of these projects were trying to find lawyers locally who understood the (Web3) space. Fast forward to today and every big law firm on the island will have a group focused on cryptocurrencies. There is a level of expertise here that is hard to find, very accessible and very concentrated,” Kirkconnell added.
In other words, there may have been a snowballing effect as Cayman Island’s crypto hubs became more established, and the competitive outlook may have thwarted their advantages.
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Thanks to the island’s strong international relationships, there was already a wealth of legal talent, but it took years of growth for that talent to build its own cryptocurrency expertise.
While some big industry players are making a fuss about moving to destinations like El Salvador to escape the regulatory unfriendliness of the United States, that’s not necessarily a productive way of thinking. Cayman’s path to cryptocurrency development instead involved attempting to maximize these interrelationships.
Isabel Forde, Head of Global Mobility at CEC, made this point very clearly. Asked whether the decentralized structure of cryptocurrencies would help Cayman-based companies connect with global markets, she insisted it might not have any impact. After all, these islands are already well integrated with international finance. Kirkconnell elaborated on this point.
“In traditional finance, it’s a little more conservative. The decentralized nature of this space is the adventurous nature…[cryptocurrency companies]themselves are more decentralized, their employees are also more decentralized… I think that’s what has led to people moving to… the Cayman Islands. Whereas in traditional finance, that’s happened much slower,” he argued.
This perspective is actually very thought-provoking. The Web3 industry is known for enabling cross-border payments, fostering connections and global communities, and more.
However, from over 14 years of experience, these trends alone are not doing much to build a crypto hub in the Cayman Islands. What drove this expansion was the idea of cryptocurrencies, not blockchain technology.
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Duplicate strategy
For obvious reasons, Kirkconnell was a bit reluctant to suggest that enterprising new crypto hubs might be able to take advantage of the Cayman Islands approach. However, this attitude was not only born out of sentiment towards his hometown, where he had lived for many years. Factors such as existing U.S. ties and TradFi infrastructure played a key role in CEC’s rise.
So what happens if another jurisdiction tries to translate these intangible benefits into regulatory ambition? One reason CEC is an attractive destination is that it prioritizes regulatory friendliness and clarity.
But that familiarity can’t come at the expense of oversight. Otherwise, disaster may ensue.
Kirkconnell said the Cayman Islands is taking a “cautious and conservative” approach to enforcing crypto regulation. Web3 is often high risk, but for the hub to be sustainable it must accumulate low risk successes. So CEC took its time, but the industry isn’t always used to being cautious.
“You… want to build something that is a source of pride, not embarrassment, for the jurisdiction. Sometimes things like this happen. Going too fast and taking too many risks may be pitfalls that other jurisdictions should be aware of. It took many years and a lot of hard work to get us to this point,” Kirkconnell said.
Kirkconnell welcomed other regions to take up the challenge, but asserted that the CEC will continue to strive to remain competitive, at least as far as the US-centric crypto market is concerned.
As an aside, he showed where symbiosis and competition overlap. The Cayman Islands is intended to support crypto companies with ties to the US, rather than replacing the US as a hub.
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But this partnership doesn’t require other regions trying to siphon off its capital and talent pipeline.
Other hubs may also try to set up in other regional hotspots, as Singapore and the UAE have done. Still, the United States is unparalleled as a global cryptocurrency powerhouse.
Neither Europe nor China nor any other world power has the inclination or ability to match the United States in Web3.
long term benefits
Still, Kirkconnell emphasized that even if the process was long and difficult, the results were worth it. After a slow start, the Cayman Islands snowballed into a fully established cryptocurrency hub.
Currently, CEC has an organic and vibrant community, so there is no preferred type of Web3 business to start operations there.
“We have businesses of all stages and sizes. Some of the projects are start-ups, while others are already established (globally). I think Cayman is the perfect platform for what the project does, and the level of expertise, infrastructure and regulatory environment is suitable for a variety of projects,” he asserted.
Kirkconnell concluded by inviting promising crypto companies to give Cayman a try. He claimed that CEC can launch projects with licenses, visas, office space, etc. within four to six weeks.
I hope this business community continues to innovate for many years to come.
