Tokenisation is here – Cayman is ready to lead

The tokenisation era has arrived

The tokenisation of assets is not about creating new cryptocurrencies. When you tokenise a fund or real-world asset, you are simply creating a digital representation of your ownership in that asset. For example, tokenising a fund means turning your shares in that fund into secure, traceable tokens on a blockchain. These tokens carry the same legal rights and obligations as traditional instruments but are streamlined to manage, faster to transfer, and auditable in real time.

For investors, this makes ownership more accessible, transparent and liquid. For fund managers and administrators, it simplifies back-office functions, reduces reconciliation errors, and creates new efficiencies in fund administration.

Tokenisation has moved beyond theory and is now actively reshaping global finance. Asset managers like BlackRock, JPMorgan and Franklin Templeton have launched tokenised treasury and money market funds. Governments from Hong Kong to the EU are issuing digital bonds and rolling out tokenised asset frameworks. The World Economic Forum projects that tokenised markets could reach US$10 trillion in value by 2030.

At its core, tokenisation takes something traditional such as shares in a fund or ownership in a building and gives it a modern, digital form. These digital tokens represent the same rights, but with the added benefits of being programmable, instantly transferable and accessible to a wider group of investors.

This transformation will affect every aspect of financial services: how we issue, trade, settle, audit and even govern financial instruments. The question is not if, but when, and more importantly, where.

Why tokenisation matters

Tokenisation improves efficiency across the financial ecosystem.

For issuers, it reduces friction by enabling 24/7 capital market access, compressing NAV processes, and automating corporate actions.

For investors, it offers greater liquidity, fractional access to previously illiquid assets, and real-time transparency. A commercial property in Cayman, for instance, can be digitally represented and accessed by global investors without the constraints of traditional infrastructure.

For regulators and service providers, it introduces both challenge and opportunity. The key is applying proven governance principles to this evolving digital infrastructure while maintaining high standards of compliance and oversight.

Cayman’s legal breakthrough

Over the past year, Cayman Finance has worked closely with Government, CIMA and the private sector to assist in the modernisation of the virtual asset regime in a way that aligns with Cayman’s global leadership in funds.

A key milestone was reached with the proposed 2025 amendments to the Virtual Asset (Service Providers) Act. These changes clarified that the tokenisation of equity and investment fund interests, already regulated under existing Cayman laws like the Mutual Funds Act, Private Funds Act and Securities and Business Act, is not treated as a virtual asset issuance requiring VASP licensing, so long as the underlying product is already subject to licensing under the prescribed Cayman financial services legislation.

This is a major win for the jurisdiction. The proposed changes significantly reduce the commercial risks and regulatory uncertainty associated with potential double licensing, which had previously delayed several high-profile tokenisation projects from launching in Cayman. It also reaffirms the strength of our financial laws while recognising the distinct nature of digital representations of regulated financial products.

At the same time, Phase II of the VASP regime also introduces licensing and supervision for custodians, trading platforms and certain technology providers, ensuring that key risks such as custody, cyber resilience and client asset segregation are addressed.

Who this affects

• Fund managers now have a clear green light to explore tokenised fund structures without falling into unintended licensing traps.
• Corporate service providers will need to build capabilities around smart contract audits, on-chain recordkeeping and investor wallet onboarding.
• Auditors and administrators must evolve their controls to handle tokenised NAV, real-time pricing feeds, and new forms of asset verification.
• Global investors continue to regard Cayman as a forward-thinking, innovation-friendly jurisdiction, reinforced by these latest regulatory enhancements.

Shaping the ecosystem

The evolution of Cayman’s regulatory landscape is the result of collaboration and insight. Through close engagement with industry, government and regulators, Cayman has taken deliberate steps to embrace tokenisation without compromising the high standards that define our jurisdiction. These conversations have helped identify pain points, clarify interpretations, and support reforms that protect our reputation while keeping Cayman competitive.

These advances do not represent the end of the journey. They reflect a coordinated effort to remove friction and create a clearer pathway for innovation. They have been shaped by real-time developments, pilot projects, and global momentum.

What comes next

It is important to distinguish between tokenising an existing financial product and issuing a new token to raise capital. Cayman has taken important steps to clarify how tokenisation of regulated financial products fits within the existing legal framework. Building on this momentum, Cayman is well positioned to explore how high-quality token issuances can be enabled in a way that supports the full potential of the virtual asset ecosystem.

Expanding Cayman’s framework: From tokenisation to issuance

As we look ahead, there is a clear opportunity to build on Cayman’s existing legal framework by learning from the path already travelled. This foundation supports the next stage of token innovation and jurisdictional leadership.

Cayman played a leading role in the early wave of blockchain innovation, particularly as a preferred jurisdiction for Initial Coin Offerings. Before the VASP Act, companies were able to raise capital through token offerings with minimal regulatory barriers. This environment attracted some of the biggest names in crypto to our shores, many of whom remain active in Cayman today. 

The introduction of the VASP Act changed that landscape. All token issuances aimed at raising capital were brought under the scope of the Act, effectively requiring a VASP licence and introducing additional compliance requirements. While this move was important for upholding regulatory standards, it also created a higher barrier to entry. As a result, many token issuers structured the issuance component in jurisdictions that currently leave such activities heavily unregulated, while relying on Cayman for the aspects that require legal certainty and global credibility.

Today, it is common to see projects use Cayman for entity formation, governance, AML/KYC and compliance, while turning to other competing jurisdictions for the actual token issuance. Cayman remains the gold standard for credibility, with a clear opportunity to further strengthen its position by addressing a remaining gap in the issuance space.

Cayman is well positioned to reaffirm its leadership in the token issuance space. The key lies in crafting a regime that facilitates legitimate token issuance while preserving our reputation for integrity and investor protection. 

The long-term vision must be for Cayman to capture as much high-value activity across the lifecycle of virtual assets as possible, by continuing to offer trusted, world-class infrastructure for capital raising, token structuring, and regulated market access. Issuers should be able to raise capital, structure tokenised financial instruments and access regulated trading and custody infrastructure through a single, trusted medium.

The bigger picture

Tokenisation is not a passing trend. It is quickly becoming the infrastructure layer for the next chapter of global capital markets. While many jurisdictions are racing to modernise their regulatory frameworks, Cayman’s edge lies in building innovation on a foundation of legal certainty, regulatory integrity, and global trust. 

Cayman is now positioned to be a preferred jurisdiction for compliant, high-quality tokenised products. Continued momentum, paired with smart, coordinated reform, will ensure we remain competitive and future-ready. 

The world is watching, and Cayman has the regulatory depth, professional talent and strategic foresight to lead the next chapter of global finance. 

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