The recently gazetted Virtual Asset (Service Providers) (Amendment) Bill, 2024 marks a significant advancement in refining the regulatory framework for virtual assets in the Cayman Islands.
Following consultations earlier this year, the Bill underscores the jurisdiction’s dedication to transparency, innovation, and regulatory excellence.
Key highlights of the proposed amendments include:
- Enhanced definitions – introducing terms like “convertible virtual asset” and “supervised person” to ensure clarity and alignment with global standards.
- Strengthened governance – requiring virtual asset entities to appoint three fit and proper directors, including at least one independent director, to enhance oversight.
- Empowered supervision – granting CIMA greater authority to oversee operations, request audited financial statements, impose conditions, revoke waivers, and ensure compliance with evolving risks.
- Client asset safeguards – mandating the segregation of client assets, robust custodial measures, and enhanced disclosures to foster transparency and trust.
- Streamlined licensing – enabling CIMA to direct entities to register under other regulatory laws when appropriate, avoiding regulatory duplication and improving efficiency.
- Support for innovation – refining sandbox provisions and providing clear transitional arrangements for pending applications, balancing flexibility and compliance.
- AML compliance – requiring detailed records of originators and beneficiaries for virtual asset transfers, ensuring strict adherence to anti-money laundering regulations.
This Bill reflects the collaborative effort of the Ministry of Financial Services – Cayman Islands Government, Cayman Islands Monetary Authority, Cayman Finance, and the industry, working together to strike balance between fostering innovation and maintaining robust oversight.
As these changes unfold, they create exciting opportunities for stakeholders across the virtual asset community as well as the broader Cayman Islands community.
Haymond Rankin is an associate director responsible for Fintech and Virtual Assets at Cayman Finance.
