The passing of the 10,000-figure landmark comes at a time when the Cayman Islands has been in the cross-hairs of US legislators who are angry about leakage of US tax revenues to international financial centres such as the Caribbean island.

At the end of June, there were 10,037 hedge funds and fund-of-hedge-funds registered in the offshore tax haven, up from 9,413 at the end of 2007, according to the Cayman Islands Monetary Authority.

US and European hedge funds register in the Cayman Islands to attract global investors, as it is often more tax efficient for them to invest through offshore locations than to invest directly in a domestic hedge fund.

There are more hedge funds domiciled in the Caymans than in any other jurisdiction, including competitors British Virgin Islands and Bermuda, and CIMA has been pushing to maintain that lead.

The industry growth comes despite a year-long financial market credit crisis that has caused many hedge funds to post slumping returns.

While Cayman authorities in recent years have made a major effort to cooperate with US investigators into possible tax fraud through offshore tax havens, they still face criticism from US lawmakers.

The US Government Accountability Office recently found that there is one mutual fund or hedge fund for every five residents in the Cayman Islands, prompting some lawmakers on the Senate Finance Committee last week to call for stronger laws to prevent tax cheating.

Meanwhile, European hedge fund launches in the first half of 2008 fell to their lowest level since the last bear market, according to a survey by Eurohedge, part of the news and data group HedgeFund Intelligence.

Some 106 funds were launched in the first half, which is 45 per cent down on a year ago and the lowest level since the first half of 2002, when markets were still in a three-year bear market and 84 funds were launched.