Dec 2024
The Cayman Islands Monetary Authority (“CIMA”) has issued a new Rule and Statement of Guidance on the obligations for the provision of virtual asset services – Virtual Asset Custodians and Trading Platforms (the “Rule”). With these services requiring licencing under the Virtual Assets (Service Providers) Act (as revised) (the “VASP Act”), the Rule seeks to bring virtual asset service providers (“VASP”) licencees in line with the obligations applicable to licencees under other regulatory laws in the Cayman Islands.
Gazetted on 13 December 2024, the measures represent another step by CIMA to provide a clearer and more comprehensive regulatory framework for VASPs in the Cayman Islands.
The Rule and SoG set out more prescriptive governance and conduct of business requirements for VASP licencees. Obligations include the need to have suitably qualified governing body members and policies and procedures mandating fair treatment of underlying clients. The Rule and SoG also set out (among other things) comprehensive expectations relating to IT and cybersecurity integrity, risk assessments, recovery plans and market abuse management.
Importantly, the Rule provides CIMA with a mandate to prescribe reporting requirements and clearly stipulates that CIMA retains enforcement powers in the event of non-compliance with the Rule.
The SoG is effective immediately, whereas the Rule is expected to take effect upon the commencement of the VASP licensing framework (which is expected to come into force in early 2025). All persons intending to apply for regulatory approval to provide custody services or operate a trading platform in the Cayman Islands should carefully consider the requirements flowing from the Rule and SoG.
For details on the virtual asset advisory services that the Conyers Regulatory & Risk Advisory team offer, please download our VASP Service Offering factsheet. For more information or to discuss the VASP registration and licensing process, please get in touch.