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Reported by The Block, decentralized exchange dYdX plans to move part of its operations to the Cayman Islands as U.S. regulators turn their attention toward decentralized finance (DeFi) protocols.
The restructuring plan, approved on Sunday with more than 90% of the vote in a community referendum, will transfer the dYdX operating trust (DOT) into a Cayman Islands foundation company, the dYdX Foundation said in an X post. The move could safeguard dYdX contributors against legal threats as securities regulators in the U.S. show signs of cracking down on DeFi protocols.
Although dYdX does not operate in the U.S., regulators there can, and have, pursued crypto projects based outside of their jurisdiction.
The Cayman Islands is hardly a surprising destination for the reinvention of DOT, a pooled fund launched last year with nearly $400,000 in tokens earmarked for dYdX's governance and operations initiatives. That’s because the British territory boasts a lax regulatory framework for digital assets, making it an attractive destination for crypto companies that want to offshore their operations to avoid tangling with more hostile regulators like those in the U.S.
As part of its crypto-friendly laws, the Cayman Islands allows international businesses to set up foundation companies within its borders. These limited liability corporate vehicles maintain a “separate legal personality,” meaning the personal finances of those who manage them are protected in the event that the company is sued, according to a blog post from offshore law firm Carey Olsen.
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