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Cayman Islands regulatory framework for Virtual Asset Service Providers: Registration and Licensing Guidelines

30 May 2024

The Cayman Islands Monetary Authority (CIMA) released its regulatory policy establishing criteria for approving the registration or licensing of virtual asset service providers (VASPs) as per the Virtual Asset (Service Providers) Act (VASP Act). This policy has been published in the official gazette on 15 May 2024.

The policy applies to:

  • Persons registering to provide virtual asset services in the Cayman Islands.
  • Persons seeking a licence to offer virtual asset custody services or operate a virtual asset trading platform.

Exclusions: Sandbox licence applicants under Part 3 of the VASP Act.

Statutory Authority Under the VASP Act, entities must:

  • Register to provide virtual asset services.
  • Obtain a licence for custodial services or operating a trading platform.

Application Considerations Applicants should:

  • Obtain a legal opinion on their compliance with the VASP Act.
  • Schedule a pre-application meeting with CIMA.
  • Ensure compliance with AML regulations and related requirements.
  • Pay relevant fees and provide detailed business and compliance plans.

Registration and Licensing Procedure CIMA assesses applications based on the VASP Act, its regulations, and this policy. Applications must include detailed information on business plans, ownership structures, and compliance frameworks. CIMA may request additional information, reject incomplete applications, and conduct due diligence with foreign regulators.

Assessment Criteria CIMA evaluates:

  • The fit and propriety of shareholders and senior officers.
  • Ownership and control structures, ensuring transparency and compliance.
  • Corporate governance frameworks.
  • Detailed business plans covering operations, financials, and risk management.
  • Internal systems and controls, particularly for IT and cybersecurity.

CIMA will not consider application from entities operating without registration or a licence. CIMA will use a consolidated supervisory approach guided by relevant laws and policies and may request additional information as needed to process applications.
The policy takes effect upon its publication in the official gazette, with licensing components becoming effective when the licensing regime for trading platform operators and custodians commences.

The policy can be found here.