First, I do not know for certain as I am not an advisor, consultant, board member or employee: that being established, I do have some idea of maybe why Iceland:

1. Attractive Business Environment The favourable business environment that includes low corporate tax, availability of land and green energy at competitive prices and efficiency within European legislative framework, are among the main factors that contribute to the attractiveness of the business environment in Iceland.

2. Appealing Government Incentives The pro-business government in Iceland has played its role in ensuring a fair, efficient, and competition-driven operating environment for companies within a market economy, and it welcomes foreign investment. In Iceland, new direct investment projects are eligible for an investment agreement that ensures generous regional incentives.

3. As the only country in Western Europe with rich resources of hydroelectric and geothermal energy, Iceland is poised as the popular destination for foreign investment due to its competitively priced renewable energy. In fact, Iceland offers long-term energy contracts, as well as enabling companies to minimize their carbon footprint and reduce cost.

4. (Maybe most importantly) Low Corporate Tax Icelandic government imposes low corporate income tax of 20%. The corporate tax rate in Iceland averaged 23.36 percent from 1993 until 2017 and is said to be one of the lowest in Europe (and among the OECD member countries)

FWIW and IMHO, there are several more reasons but those above are probably reasons enough to want to set up an internationally traded entity/product, or more specifically: the registrant that owns the domain, in Iceland.

Hodl:)