In an effort to provide regulatory clarity for funds professionals and investors, the Cayman Islands Government has published three legislative bills to confirm a framework for tokenised investment fund structures in Cayman.
The Mutual Funds (Amendment) Bill, 2026, Private Funds (Amendment) Bill, 2026, and the Virtual Asset (Service Providers) (Amendment) Bill, 2026 are expected to be presented by the Premier and Minister for Financial Services and Commerce, André Ebanks, at the latest meeting of Parliament scheduled for next month.
“These legislative enhancements demonstrate the Cayman Islands’ commitment to remaining at the forefront of global financial services innovation while maintaining the strong regulatory standards for which our country is recognised,” Premier Ebanks said. “By providing clear statutory frameworks for tokenised funds, we are ensuring that technological advancements can occur within a predictable, transparent and internationally credible regime. This strengthens investor confidence, supports the resilience of our financial services sector, and enhances Cayman’s competitiveness in an evolving global marketplace.”
Tokenisation refers to the digital representation of an investor’s equity or investment interest in a fund using blockchain or similar technology, while the underlying legal ownership and investor rights remain unchanged. Tokenised fund structures offer potential efficiencies in areas such as recordkeeping, transfer controls, settlement processes and investor onboarding.
While tokenised funds have been present in the Cayman Islands for several years, the absence of express statutory provisions led to uncertainty, particularly regarding whether the issuance of digital tokens representing an ownership interest in a fund could fall within the scope of the Virtual Asset (Service Providers) Act (VASP Act).
Following consultation with industry stakeholders and the Cayman Islands Monetary Authority (CIMA), the Ministry of Financial Services concluded that tokenised funds are most appropriately regulated within Cayman’s existing funds framework. The amendments ensure that tokenised mutual funds and tokenised private funds remain subject to the Mutual Funds Act and Private Funds Act, preserving strong investor protection and anti-money laundering and countering the financing of terrorism oversight.
Specifically, the mutual funds and private funds bills introduce certain statutory provisions for tokenised funds, including:
- definitions of digital equity tokens and digital investment tokens,
- enhanced recordkeeping obligations,
- clarifications on transferability,
- disclosure of technology-specific risks, and
- express supervisory and inspection powers for CIMA over token transactions and underlying technology.
The VASP Amendment Bill complements these revisions by clarifying that the issuance of digital equity or investment tokens by regulated tokenised funds does not constitute a “virtual asset issuance” under the VASP Act.
Tokenised funds that provide virtual asset services to third parties, such as exchange, custody or transfer services, will remain fully subject to the VASP Act.
Haymond Rankin, Associate Director for Fintech, Virtual Assets & Banking at Cayman Finance said: “The publication of these Bills for consultation represents an important step in providing legal clarity for the tokenisation of fund interests within Cayman’s existing regulatory framework. By addressing how tokenised mutual funds and private funds are treated under Cayman law, the proposed amendments help reduce uncertainty while maintaining appropriate regulatory oversight.”
He said that Cayman is already a leading jurisdiction for investment funds and digital asset structures. “These amendments, together with the new market conduct measures, support the responsible development of tokenised funds by bringing innovation within a framework that is designed to protect market integrity and investor interests. As the consultation progresses, industry input will be important to ensure the rules are practical in implementation and deliver the intended clarity at scale,” Rankin added.
The Premier went on to say that regulated investment funds remain a foundational pillar of the Cayman Islands’ financial services industry. These amendments are designed to enhance the country’s investment funds regime by accommodating technological developments in a proportionately controlled and supervised manner, strengthening resilience, innovation capacity, and Cayman’s position as a globally recognised financial services centre of excellence and innovation.
