By Nathaniel Popper

New York Times News Service

SAN FRANCISCO — Hedge funds go to the Cayman Islands to incorporate. Big companies are generally domiciled in Delaware. And online poker companies often set up their bases in Gibraltar and Malta.

Now the race is on to become the go-to destination for cryptocurrency companies that are looking for shelter from regulatory uncertainty in the United States and Asia.

In small countries and territories including Bermuda, Malta, Gibraltar and Liechtenstein, officials have recently passed laws, or have legislation in the works, to make themselves more welcoming to cryptocurrency companies and projects. In Malta, the government passed three laws July 4 so companies can easily issue new cryptocurrencies and trade existing ones. In Bermuda this year, the legislature passed a law that lets startups doing initial coin offerings apply to the minister of finance for speedy approval.

“We are 65,000 people, and 20 square miles, but we have a very advanced economy,” the premier of Bermuda, E. David Burt, said in an interview at a cryptocurrency conference in May in New York, where he was trying to pitch companies on the island’s charms. “We want to position Bermuda as the incubator for this industry.”

The competition for cryptocurrency companies is part of a broader rush by governments to figure out how to approach a new industry that took on outsize prominence over the last year.

Becoming a crypto center has many potential upsides, including jobs and tax revenue.

But the drive to be a crypto nexus also comes with significant risk. Hackings and scams have followed the industry everywhere it has gone. They have been aided by the underlying technology introduced by bitcoin, known as the blockchain, which was built to make it possible to send money without requiring approval from government agencies or existing financial institutions. And the cryptocurrencies are hardly stable, with the prices of most having plunged in 2018 after skyrocketing last year.

The use of cryptocurrencies by hackers was reinforced this month when the Justice Department announced charges against 12 Russian intelligence officers accused of hacking the Democratic National Committee and said they had principally used bitcoin to fund their work.

Volatility and uncertainty have deterred some countries and caused others to hesitate in embracing crypto companies. In China, the government banned cryptocurrency exchanges and initial coin offerings after many of its citizens were swept up in the frenzy and bet their savings on digital tokens. And Japanese authorities halted the operations of several crypto exchanges this year after one of the biggest licensed exchanges was hacked.

In the United States, the head of the Securities and Exchange Commission, Jay Clayton, has warned that most companies that have raised money by selling cryptocurrencies have most likely not followed the law. But his agency has not provided clear guidance on the line demarcating legal and illegal projects.

Seizing an opportunity

All of this has opened the door for smaller countries to provide a friendlier environment, separate from private efforts — such as in Puerto Rico — to create crypto havens. And many of the countries’ moves are already having an effect, with dozens of companies — including the largest exchange in the world — announcing plans to set up offices in the small jurisdictions that have passed laws.

Bermuda has been a leading player. Apart from passing the law to allow for fast approval of initial coin offerings, the British territory has a law in the works to open the doors to cryptocurrency exchanges and related services. Burt said his government was modeling its approach on one it had taken with the insurance industry, in which Bermuda has become a major player.

Bermuda’s measures have attracted Will McDonough, founder of a new cryptocurrency called iCash. He said he had decided to base his company there because of the island’s experience in international finance and the government’s willingness to listen to the company’s input.

“The largest issue blockchain companies have is not knowing how they’ll be governed or regulated,” said McDonough, a former vice president at Goldman Sachs. “Those markets that have made the rules clear have found many companies coming to play by the rules.”

McDonough is planning to raise $35 million by selling iCash tokens to investors around the world, including some in the United States. The iCash tokens are initially designed to be the method of payment for an online gambling site. He said he would still be based in Florida, but would have an office and a head of operations in Bermuda, which the island requires of all companies.

Many of the countries passing the new laws have said they are not interested in becoming a home for illicit activity. Albert Isola, Gibraltar’s finance minister, said his government was accustomed to making hard decisions after regulating online gambling companies for the last 25 years.

“For every one license we’ve issued, we’ve probably said no to 10,” he said. “When you’re considering a new sector, to bring in big names is extremely attractive, but they’ve got to be good names. So you’ve got to be willing to say no to even some of the bigger ones.”

Online gambling is responsible for around 3,000 jobs on Gibraltar, or about 10 percent of the territory’s population. Isola said he saw a similar possibility in the blockchain, calling it “the next significant new flow of business.”

Gibraltar is in the final stages before voting on regulations that, similar to Malta’s, would let companies issue and trade digital tokens. Already, 35 companies have applied to the government for licenses to operate blockchain businesses.

Liechtenstein, the Alpine nation between Austria and Switzerland, is also among the newer entrants to the race, with the prime minister circulating a Blockchain Act this summer to allow companies to sell tokens.

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