Nov 2024
Following consultations earlier this year, the Virtual Asset (Service Providers) (Amendment) Bill, 2024 (the Bill) has been gazetted and represents a major milestone in enhancing the Cayman Islands’ regulatory landscape for virtual assets service providers (VASPs).
In addition to the introduction of clearer definitions to align with global standards, the Bill seeks to achieve enhanced governance measures throughout the industry and provides the Cayman Islands Monetary Authority (CIMA) with greater powers of oversight.
In a welcome development, the Bill also seeks to introduce a streamlined licencing procedure and clearer measures for sandbox licence holders who wish to transition to full registration/licence.
Conyers Cayman Regulatory & Risk Advisory experts Roisin Liddy-Murphy, Sarah Howie and Wayne Flanagan share some particularly noteworthy developments from the Bill:
- Upon commencement, any registered persons engaging in custody activity or operating a virtual asset trading platform will be required to apply for an uplift to licence within 90 days.
- All VASPs will be required to appoint three ‘fit and proper’ directors, including at least one independent director in order to strengthen oversight.
- CIMA will be permitted to direct entities to register under other regulatory frameworks when appropriate, which may assist with limiting any dual licensing.
- If enacted, the Cayman Islands Monetary Authority (CIMA) will be granted expanded powers, including rights to request audited financial statements and impose conditions based on the nature, risk and scale of the relevant business model.
- All VASPs will be required to adopt policies and procedures to ensure segregation of client assets and implementation of strong custodial practices.
- The list of required disclosures would be expanded to include disclosures such as those relating to the VASPs regulatory obligations, grievance procedures, sharing of client’s information to third parties and internal custodial governance arrangements.
These changes would represent exciting opportunities and welcome clarity for current and prospective industry participants. All current and prospective VASPs should take stock of the potential new measures and note the deadlines associated with a number of the requirements.
For further information on the digital asset advisory services that the Regulatory & Risk Advisory team offer, please download our VASP Service Offering factsheet below.