A new framework for regulating virtual asset businesses was introduced in the Cayman Islands on 20 May 2020 (for further details please see "New regulatory regime for virtual assets").
On 28 October 2020 the government announced that the Virtual Asset (Service Providers) Law 2020 will commence in phases, with phase one commencing on 31 October 2020.
Phase one will focus on anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance, supervision and enforcement. Persons engaged in or wishing to engage in virtual asset services must now be registered with the Cayman Islands Monetary Authority (CIMA) under the Virtual Asset (Service Providers) Law 2020.
Provisions of the Virtual Asset (Service Providers) Law 2020 which relate to enforcement, penalties or offences will be commenced on 31 January 2021. Persons which have not registered or notified CIMA by the authority's application deadline, but which are engaging in virtual asset services on and after 31 January 2021, will be subject to penalties and other enforcement measures. CIMA has advised that in order to ensure that registrations are completed on or before 31 January 2021, applicants are encouraged to apply by 12 December 2020.
Phase two, which is expected to begin in June 2021, will bring into force the licensing and virtual asset issuance approval process.
Businesses wishing to carry on any virtual asset service (including virtual asset custody services, operating a virtual asset trading platform or selling virtual assets to the public) must first register with CIMA. However, they need not apply for a licence or for permission to issue tokens (as applicable) until such time as the relevant provisions in the Virtual Asset (Service Providers) Law 2020 are commenced under phase two.
