The Virtual Asset (Service Providers) Law, 2020 (the “Law”) was gazetted on 25 May 2020 and will come into force upon issue of a commencement order in due course. The Law represents Cayman’s first legal framework for the registration, licensing and supervision of virtual asset service providers conducting business in the Cayman Islands. This significant legislative development represents Cayman’s commitment to facilitating innovative virtual asset business whilst adopting international standards of regulation prescribed by the Financial Action Task Force.
Virtual asset service providers (VASPs) include companies, limited liability and foreign companies, and general, limited and exempted limited partnerships formed and, where required, registered or licensed, in accordance with the relevant laws of the Cayman Islands that provide virtual asset services as a business, or in the course of business, in or from within the Cayman Islands.
The Law defines “virtual assets” as digital representations of value that can be digitally traded or transferred and can be used for payment or investment purposes. Digital representations of fiat currencies or virtual service tokens are not included as virtual assets under the legislation. A “virtual asset service” is defined as the issuance of virtual assets or the business of providing one or more of the following services or operations for or on behalf of a natural or legal person or legal arrangement:
VASPs must be licensed, registered, operating under a waiver granted by the Cayman Islands Monetary Authority (CIMA), or have a sandbox licence in order to carry on business as a virtual asset service provider under the Law. The nature of operations and business the VASP conducts, or wishes to carry out, will determine how the VASP is supervised under the Law. Each of the separate legal requirements are discussed below.
To continue reading full articles in PDF format:
New Legislative Regime for Virtual Asset Service Providers