Cayman Islands Announces Legal Framework in Bid to Attract Crypto Businesses
The Cayman Islands is building a regulatory framework for "virtual asset service providers" with some measures already enacted.
Nov 2, 2020 at 9:38 a.m. UTCUpdated Aug 19, 2021 at 5:26 a.m. UTC
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The Cayman Islands, an autonomous British Overseas Territory in the Caribbean, is building a regulatory framework for "virtual asset service providers" (VASPs).
- Announced Saturday, the Caymans' Ministry of Financial Services has already published an initial set of rules that came into into effect Oct. 28.
- These kick off what the ministry calls "Phase One" of the framework, which will determine how the Caymans will regulate and enforce anti-money laundering (AML) and countering the financing of terrorism (CFT) measures.
- VASPs already working in the Caymans, or planning to, will need to notify and register with the Cayman Islands Monetary Authority (CIMA) and comply with the AML/CFT rules.
- "Phase Two," slated to come into force next June, will look at licensing requirements and "prudential supervision" for VASPs.
- A new virtual assets bill to bring in provisions to facilitate the phased rollout of the new rules was published last Thursday and will be presented at the next sitting of the Cayman Islands Legislative Assembly.
- The Ministry said the new framework will "strengthen" the government's ability to draw new entities or individuals to set up base in the Caymans.
- Phase One also comes as the Cayman Islands is being assessed by the Financial Action Task Force and the Caribbean Financial Action Task Force on its efforts to combat proliferation financing (CPF) – that is, funding of weapons of mass destruction.
- The new rules aim to align companies in the jurisdiction with the CFP, AML and CFT rules, the Ministry said.
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