Crypto License in Cayman Islands
The Cayman Islands' Strategic Position in Digital Assets
The Cayman Islands, long established as a leading global financial centre, have solidified their position in the digital asset space with the comprehensive rollout of the Virtual Asset (Service Providers) Act (VASP Act). This landmark legislation, enacted in phases and fully enforced with the licensing regime in 2025, positions the jurisdiction at the forefront of FATF-compliant crypto regulation. Securing a Cayman Islands Crypto License is now mandatory for any entity conducting, or holding itself out as conducting, virtual asset services in or from the Islands.
The Cayman Islands Monetary Authority (CIMA), the sole regulatory body, has adopted a robust, risk-based approach, moving beyond simple registration to mandatory licensing for high-risk activities like custody and platform operation. This strategic move provides licensed VASPs with a powerful signal of credibility and compliance that is highly valued by institutional investors and global banking partners. This definitive guide provides a thorough, SEO-optimized breakdown of the 2025 VASP framework, detailing the licensing requirements, operational substance, rigorous AML/CFT protocols, and the critical application process.
Defining the Cayman VASP Regime and Regulator
The VASP Act provides the legislative foundation for regulating virtual asset services, ensuring the Cayman Islands maintain their commitment to international standards on financial integrity and transparency.
Who is a Virtual Asset Service Provider (VASP)?
The Act defines a Virtual Asset (VA) as a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes (excluding digital representations of fiat currency or digital assets that fall under the Securities Investment Business Act – SIBL).
An entity is considered a VASP if it conducts the following services for or on behalf of another person as a business:
Virtual Asset Exchange: Trading virtual assets for fiat currency, or trading one VA for another VA.
Virtual Asset Transfer: Moving VAs from one address or account to another.
Virtual Asset Custody Service: Safekeeping or administration of virtual assets or instruments enabling control over virtual assets (e.g., providing crypto custody solutions).
Virtual Asset Trading Platform Operation: Operating a market that facilitates the trading of VAs.
Issuance of Virtual Assets: The sale of newly created VAs to the public in or from the Cayman Islands (subject to clarification regarding tokenized funds).
Financial Services related to VA Issuance: Participation in and provision of financial services related to an issuer’s offer or sale of a VA.
Entities dealing only with virtual service tokens (e.g., non-transferable loyalty points) or engaging in activities solely for their own account are typically excluded from the VASP regime, but a legal assessment is highly recommended.
The Role of the Cayman Islands Monetary Authority (CIMA)
CIMA is the exclusive authority responsible for the regulation, supervision, and enforcement of the VASP Act. Its oversight is comprehensive, covering initial licensing, ongoing prudential supervision, and AML/CFT compliance. CIMA utilizes the Regulatory Enhanced Electronic Forms Submission (REEFS) platform for all applications and ongoing regulatory filings.
The Two-Tiered Regulatory Approach: Registration vs. Licensing
The Cayman VASP regime is structured into two main tiers based on the nature and risk profile of the services provided.
Tier 1: VASP Registration
This tier applies to entities conducting VASP activities that do not involve custody services or the operation of a trading platform.
Scope: Includes activities like providing virtual asset transfer services or advising on VA issuance.
Primary Focus: The main requirement for these entities is compliance with AML/CFT/CPF (Countering Proliferation Financing) regulations and fulfilling general governance requirements.
Tier 2: Mandatory VASP Licensing
This higher tier, fully enforced from April 1, 2025, requires a full license from CIMA.
Scope: Entities that provide Virtual Asset Custody Services or operate a Virtual Asset Trading Platform (VATP).
Increased Scrutiny: These activities face heightened regulatory requirements, including additional prudential requirements, detailed disclosure obligations, and strict rules regarding the segregation of client assets.
The shift from mere registration to mandatory CIMA VASP Licensing for these activities is the jurisdiction’s most significant step in bolstering consumer protection and market integrity.
2.3. Licensing Fees and Capital Requirements
While the Cayman Islands has historically avoided rigid, fixed minimum capital requirements for all VASPs, CIMA adopts a risk-based approach and requires demonstration of adequate capital commensurate with the scale, risk, and complexity of the VASP’s operations.
| VASP License Type / Activity | Application Fee (Approx. KYD / USD Equivalent) | Key Financial Requirement |
| VASP Registration (Lower Risk Activities) | Variable, lower than licensing. | Demonstration of sufficient financial resources to meet all operational and compliance costs. |
| VASP Trading Platform (VATP) License | Starts at KYD 50,000 (approx. US$60,000) | Demonstration of adequate capital and reserves in line with projected revenue and risk exposure, as determined by CIMA. |
| VASP Custody Services License | Starts at KYD 30,000 (approx. US$36,000) | Strict segregation of client assets from proprietary assets and proof of internal safeguards (e.g., insurance arrangements). |
| Annual Fee (Post-Licensing) | Varies significantly based on license type and business volume. | Ongoing demonstration of financial solvency and capital adequacy. |
Mandatory Substance and Operational Requirements
The VASP Act mandates that operations be truly conducted “in or from within the Cayman Islands,” necessitating a clear demonstration of Economic Substance.
Corporate Governance and Local Presence
Legal Entity: The VASP must be incorporated as a legal entity in the Cayman Islands.
Physical Presence: While not strictly defined as a “physical office” for all registrants, licensed VASPs must maintain a registered office in the Cayman Islands where all key documents, records, and client registers are maintained and readily accessible. A demonstrable, functional presence, appropriate for the scale of operations, is a non-negotiable requirement for licensing.
Audited Financial Statements: VASPs must keep proper books of accounts and submit annual audited financial statements to CIMA.
Fit and Proper Criteria
CIMA conducts a rigorous Fit and Proper Assessment of the VASP’s ultimate beneficial owners (UBOs), directors, and key management personnel. This assessment covers:
Integrity and Honesty: Verified through Police Clearance Certificates or Certificates of No Criminal Record, and professional references.
Competence and Experience: Proven track record and relevant qualifications in finance, technology, or virtual asset management.
Financial Soundness: The financial standing of the individuals and the VASP itself must be sound, requiring submission of personal financial references and Source of Wealth (SoW) documentation.
Governance: The ability of the individuals to establish and maintain robust oversight and control over the VASP’s operations and compliance framework.
The Cornerstone of Compliance: AML/CFT/CPF Framework
Compliance with the Cayman Islands Anti-Money Laundering Regulations is the most critical element of the VASP regime. VASPs are designated as Relevant Financial Business and are subject to direct supervision by CIMA’s AML Division.
The AML Manual and Designated Officers
A VASP must develop a comprehensive AML/CFT/CPF Manual detailing the following internal controls:
Risk-Based Approach (RBA): Implementing an Enterprise-Wide Risk Assessment (EWRA) tailored specifically to virtual asset risks (e.g., the use of mixers, privacy coins, or cross-border high-risk jurisdictions).
Customer Due Diligence (CDD) / KYC: Robust procedures for identity verification, including Enhanced Due Diligence (EDD) for high-risk clients like Politically Exposed Persons (PEPs) and large-volume traders.
AML Compliance Officer (AMLCO): Mandatory appointment of a local, CIMA-approved AMLCO who oversees the firm’s compliance program.
Money Laundering Reporting Officer (MLRO): Mandatory appointment of an MLRO responsible for the firm’s suspicious activity reporting (SARs) to the Cayman Islands Financial Reporting Authority (FRA).
Implementation of the FATF Travel Rule
The VASP Act enforces compliance with the FATF Recommendation 16 (The Travel Rule), obligating VASPs to obtain, hold, and transmit specific originator and beneficiary information for virtual asset transfers above a de minimis threshold (typically equivalent to USD 1,000).
| Travel Rule Requirement | VASP Compliance Action |
| Originator Information | Obtain Originator’s Name, Account/VA Wallet Number, and Physical Address. |
| Beneficiary Information | Obtain Beneficiary’s Name and Account/VA Wallet Number. |
| Data Transmission | Utilize a compliant technical solution (e.g., a Travel Rule Solution Provider – TRSP) to securely send this data to the counterparty VASP immediately or before the transaction. |
| Record Keeping | Maintain all Travel Rule data for a statutory minimum period (e.g., five years) and make it available to CIMA/FRA upon request. |
Technology, Security, and Client Asset Segregation
Licensed VASPs, particularly custody providers and platform operators, must adhere to strict operational standards to protect clients and ensure market integrity.
Cybersecurity and IT Governance
The VASP must establish and document robust technological safeguards, including:
IT Risk Policy: Detailed policies governing data security, access control, encryption, and system resilience.
Business Continuity and Disaster Recovery (BCP/DR): Mandatory and regularly tested plans to ensure the VASP can recover from major operational disruptions or cyberattacks with minimal service interruption.
Security Audits: CIMA reserves the right to require an independent technical security audit by an approved expert to certify the integrity and robustness of the VASP’s trading platform and custody systems.
Client Asset Safekeeping and Proprietary Trading
The VASP Act imposes critical safeguards to protect client funds from VASP insolvency or mismanagement.
Segregation Mandate: Licensed VASPs must ensure that all client virtual assets and fiat funds are strictly segregated from the VASP’s own proprietary assets.
Internal Controls: Clear internal controls must govern the custody of private keys, typically requiring cold storage solutions, multi-signature access, and multi-jurisdictional key storage distribution.
For VATPs, clear rules must distinguish between the VASP’s own trading activities and client order execution, preventing front-running and other market manipulation.
The VASP Licensing Process: A Step-by-Step Checklist
The process of obtaining a Cayman Islands Crypto License is demanding, requiring meticulous preparation and proactive engagement with CIMA via the REEFS platform. The typical timeline, assuming a complete and accurate initial submission, can range from 3 to 6 months.
Pre-Application and Incorporation
Legal Assessment: Obtain a legal opinion confirming the business activities require VASP registration or licensing, and if any assets fall under the SIBL (Securities Investment Business Act).
Entity Formation: Incorporate the Cayman Islands entity (e.g., Exempted Company).
Key Personnel Selection: Appoint CIMA-approved directors and mandatory functionaries (AMLCO, MLRO) and prepare their Fit and Proper documentation.
Documentation Assembly Checklist
The complete application dossier submitted via the REEFS platform must include:
| Document Category | Required Submissions for CIMA VASP License |
| Corporate/Legal | Certificate of Incorporation, Memorandum & Articles (explicitly allowing VASP activities), Corporate Structure Chart, Proof of Registered Office and local presence details. |
| Personnel and Integrity | Personal Questionnaire (PQ) forms for all directors/UBOs, CVs, Certificates of No Criminal Record, Source of Wealth/Funds documentation, Professional References. |
| Financial and Business Plan | Detailed Business Plan (covering structure, market, technology, and governance), Two-Year Financial Forecasts (including projected revenue, capital, and cash flow), Proof of adequate capital (as determined by CIMA). |
| Compliance and Operational | Comprehensive AML/CFT/CPF Manual, IT & Cybersecurity Policy, BCP/DR Plans, Compliance Monitoring Manual, Travel Rule Implementation Details, Client Asset Safeguarding Procedures. |
Regulatory Review and Grant
Filing and Fee Payment: Submit the complete package via REEFS and pay the initial application fees.
CIMA Review: CIMA conducts a detailed analysis, often requesting Requests for Information (RFIs) and possibly scheduling interviews with key personnel. Prompt and precise responses to CIMA’s RFIs are vital for minimizing the application timeline.
Conditional Approval: CIMA may grant conditional approval, subject to final checks (e.g., bank account opening).
License Grant: Upon meeting all conditions, the full VASP License is granted, and the VASP can commence regulated activities.
The Regulatory Landscape for Tokenized Assets
The VASP Act includes provisions for the issuance of Virtual Assets, but recent regulatory amendments provide crucial clarity, particularly concerning Tokenized Investment Funds and securities.
Distinction: VA vs. SIBL Securities
The crucial distinction lies in whether a digital asset qualifies as a ‘security’ under the SIBL or as a ‘virtual asset’ under the VASP Act.
Securities (SIBL): If a digital asset represents traditional investment interests (e.g., equity, debt, fund interests), it falls under the purview of SIBL, requiring the relevant fund or platform to comply with the Mutual Funds Act or Private Funds Act and potentially SIBL licensing.
Virtual Assets (VASP Act): The VASP Act primarily targets non-securitized utility, payment, and exchange tokens.
Recent amendments aim to exclude the issuance of equity interests or investment interests under the existing Funds Acts from the VASP definition of “issuance,” providing regulatory relief and clarity for the growing segment of Tokenized Funds.
Sandbox Licensing
CIMA maintains a Regulatory Sandbox regime, which allows innovative FinTech businesses, including those utilizing Decentralized Ledger Technology (DLT) that may not perfectly fit current VASP definitions, to operate under controlled, restricted conditions. This is a vital pathway for testing novel business models and obtaining regulatory comfort before full licensing.
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Ongoing Obligations and Enforcement
Maintaining the Cayman Crypto License requires continuous, diligent compliance, subject to CIMA’s supervisory and enforcement powers.
Ongoing Prudential and Reporting Requirements
VASPs must adhere to continuous reporting and operational standards, including:
Annual Audit and Filings: Submitting audited financial statements and annual regulatory returns via REEFS.
Prior Approval: Obtaining CIMA’s prior written approval for significant changes, including:
Change of directors, officers, or key personnel.
Change of shareholders or UBOs (any significant interest).
Material changes to the Business Plan, technology systems, or custody arrangements.
AML/CFT Reporting: Submitting quarterly compliance reports and Suspicious Transaction Reports (STRs) to the FRA promptly.
CIMA Enforcement
CIMA possesses broad enforcement powers under the VASP Act. Non-compliance can lead to:
Fines and Penalties: Substantial administrative fines for breaches of AML, governance, or licensing requirements.
Directive Orders: Issuing orders to cease and desist certain activities or implement specific remediation measures.
In severe or persistent cases of non-compliance, particularly those involving major AML breaches or client asset mismanagement, CIMA may ultimately proceed to the revocation of the VASP license.
Strategic Advantage and Tax Considerations
The Cayman Islands VASP License offers significant strategic benefits that extend beyond regulatory compliance.
Global Reputation and Banking Access
Credibility: The license provides a gold standard of regulatory approval, enhancing the VASP’s reputation among global financial institutions and partners, and significantly facilitating Tier-1 correspondent banking relationships.
FATF Compliance: The jurisdiction’s proactive stance and successful efforts to align with FATF standards reinforce its image as a reliable and transparent financial centre, reducing regulatory risk exposure for international clients.
Tax Neutrality
The Cayman Islands maintain a virtually tax-neutral environment, which is a powerful incentive for international VASPs.
Corporate Tax: There is no direct corporate tax on profits, income, or gains.
Other Taxes: There are generally no capital gains taxes, withholding taxes, or personal income taxes.
Cayman Islands exempted companies can obtain a Tax Exemption Certificate (valid for up to 30 years), offering exceptional long-term certainty regarding the tax environment.
Deep Dive into Prudential Requirements and Financial Resilience
While CIMA does not impose a single, fixed minimum share capital for all VASPs, its focus on prudential requirements is stringent, especially for licensed entities providing custody and trading platforms. This ensures the VASP is financially resilient and capable of absorbing operational and market shocks.
Adequate Capital and Ongoing Solvency
The central principle of CIMA’s financial supervision is that the VASP must maintain capital that is adequate in both quantity and quality to support its business activities and cover its risks.
Capital Assessment: The VASP must conduct a formal, documented assessment that links its required capital to its Enterprise-Wide Risk Assessment (EWRA). This capital buffer must cover operational, market, credit, and compliance risks inherent to the virtual asset business model.
Demonstration of Financial Potential: CIMA requires a thorough presentation of the VASP’s Source of Funds and Wealth (SoF/SoW) for the initial capital injection. This scrutiny ensures the VASP’s ultimate beneficial owners (UBOs) and the entity itself possess legitimate and stable financial backing.
Capital Adjustment: CIMA reserves the right to impose a specific capital level or require an increase in share capital based on the complexity, scale, and risk of the applicant’s proposed business during the review process. Failure to meet CIMA’s specified capital adequacy level is an automatic ground for license refusal or revocation.
Insurance and Indemnity
In addition to capital, CIMA may require VASPs, particularly those holding client assets, to secure appropriate insurance arrangements.
Professional Indemnity Insurance (PII): Custodial VASPs should demonstrate they hold adequate PII coverage against potential losses arising from professional errors, omissions, or cybersecurity breaches that could impact client assets.
Fidelity and Crime Insurance: Coverage against internal and external crime, including fraud and theft of virtual assets, may be required, further reinforcing the client asset protection framework established under the VASP Act.
Deep Dive into Prudential Requirements and Financial Resilience
The application submission through the REEFS (Regulatory Enhanced Electronic Forms Submission) platform is a critical, highly structured process. Success depends heavily on the quality and completeness of the initial filing and the professional conduct during subsequent regulatory engagement.
Mastering the REEFS Submission
The REEFS system is CIMA’s centralized gateway and is designed for deep due diligence.
Data Consistency: All information submitted must be perfectly consistent across legal documents, financial forecasts, and compliance manuals. Discrepancies between the Business Plan and the Financial Projections, for instance, are major red flags that lead to significant delays.
Supporting Documentation: Every claim made in the application (e.g., system security, competence of the MLRO) must be supported by external documentation, such as third-party attestations or résumés. CIMA places high value on verifiable evidence rather than mere declarations of intent.
Responding to Requests for Information (RFIs)
The RFI stage is where CIMA tests the VASP’s operational readiness and the competence of its proposed management.
Speed and Detail: RFIs must be addressed promptly (usually within 5-10 business days) and with exhaustive detail. Generic or vague answers will trigger further, more complex RFIs.
Interviews with Key Personnel: CIMA frequently requests interviews with the AMLCO, MLRO, and Chief Technology Officer (CTO). These interviews assess not just the individual’s competence, but their deep understanding of the VASP’s specific risks, controls, and Cayman regulatory obligations. The MLRO, in particular, must demonstrate a comprehensive grasp of the Cayman Islands’ specific AML Guidance Notes and the FRA reporting procedures.
Deep Dive: AMLCO, MLRO, and Governance Roles
The integrity of the AML/CFT framework relies on the effective execution of duties by the designated compliance personnel, who must be CIMA-approved.
The Critical Distinction and Duties
| Role | Key Responsibility under VASP Act | Primary Reporting Focus |
| AML Compliance Officer (AMLCO) | Overall management and oversight of the VASP’s compliance program, policies, training, and internal controls effectiveness. | Internal Audits, CIMA Annual Compliance Returns, Policy Review. |
| Money Laundering Reporting Officer (MLRO) | Receiving and assessing internal suspicious activity reports, filing Suspicious Transaction Reports (STRs) with the Financial Reporting Authority (FRA), and acting as the primary liaison with the FRA. | External Reports (STRs), High-Risk Customer Monitoring. |
Independence and Local Presence
CIMA emphasizes the functional independence and local accessibility of these roles.
Autonomy of the MLRO: The MLRO must have sufficient seniority and independence to make decisions about filing STRs without interference from management or commercial pressure. This autonomy is rigorously assessed during the Fit and Proper process.
Local Accessibility: While the MLRO/AMLCO may be external service providers in some cases, CIMA requires proof of their physical accessibility or the presence of a suitably qualified individual within the Islands to address urgent compliance matters and facilitate CIMA inspections. A VASP must demonstrate that compliance management is not merely an offshore paper function, but an active, locally managed control center.
Tokenization and the Securities Investment Business Act (SIBL)
The Cayman Islands’ approach to tokenized funds and assets is highly sophisticated, requiring a clear understanding of the overlap between the VASP Act and the Securities Investment Business Act (SIBL).
Regulating Tokenized Funds
The VASP Act’s amendments provide clarity by aiming to exclude the issuance of digital assets that represent equity interests in a regulated Mutual Fund or Private Fund from the VASP ‘issuance’ definition.
Regulatory Certainty: If a tokenized asset clearly represents an interest in a fund registered under the Mutual Funds Act or Private Funds Act, its regulation falls under those acts, preventing dual regulation under the VASP Act. This legislative clarity is crucial for attracting institutional tokenization platforms and large-scale digital asset funds.
Platform/Broker Overlap: However, if a VASP operates a secondary market (a platform) for the trading of these tokenized securities, that platform may still require an explicit Securities Investment Business License (SIBL License) in addition to, or instead of, a VASP License, depending on the nature of the trading activity.
Securities Investment Business License (SIBL)
Any entity dealing in, arranging transactions for, or managing investments related to digital assets that are deemed ‘securities’ must comply with SIBL.
VATP vs. SIBL Platform: A VASP operating a Virtual Asset Trading Platform (VATP) must conduct an ongoing assessment to ensure that any digital asset listed does not transition into a security. Listing a security without a SIBL license is a serious breach.
CIMA Approval: If a VATP wishes to engage in SIBL-related activities (e.g., listing a security token), it must apply to CIMA for express SIBL approval, demonstrating that the platform’s systems and disclosures meet the higher consumer protection standards required for securities.
The VASP Regulatory Inspection and Enforcement Cycle
Licensing is the beginning; CIMA’s enforcement framework ensures ongoing adherence through a cycle of off-site reporting, thematic reviews, and on-site inspections.
Thematic Reviews and Off-Site Monitoring
CIMA conducts regular off-site monitoring using the data submitted via the REEFS platform and AML reports filed with the FRA.
Data Analysis: CIMA analysts monitor key performance indicators (KPIs) and risk metrics derived from the VASP’s annual returns, looking for sudden spikes in transaction volume, changes in high-risk jurisdiction exposure, or capital adequacy shortfalls.
Thematic Reviews: CIMA may initiate a thematic review focusing on a specific risk area across the VASP sector, such as Travel Rule compliance or the use of specific types of unhosted wallets. VASPs will be required to submit specific data and attestations related to the theme under review.
On-Site Compliance Inspections
On-site inspections verify that the policies and procedures submitted to CIMA actually work in practice and that the local substance is genuine.
Substance Verification: Inspectors will physically check the registered office, interview the Resident Director and local staff, review meeting minutes, and check payroll records to ensure the VASP meets its economic substance obligations.
Procedure Testing: Inspectors will select client files and transaction logs to test the VASP’s adherence to its AML/CFT Manual, verifying that CDD was correctly applied, risk scores were properly assigned, and SARs/STRs were filed on time when suspicious activity was detected. Any material discrepancy between the documented policy and the implemented procedure will result in a finding that requires urgent remediation.
Strategic Planning and Market Positioning
For international businesses, choosing the Cayman Islands is a strategic decision that positions the VASP at the high-end of the global compliance spectrum.
Vendor and Partnership Due Diligence
The success of the VASP application often hinges on the quality of its third-party partnerships.
Third-Party Providers (TPPs): The VASP must conduct due diligence on all critical TPPs, including core banking partners, blockchain analytics providers, and the technology platform operator. CIMA will assess the VASP’s oversight over these TPPs.
Outsourcing: If the VASP outsources key functions (e.g., internal audit or IT maintenance), the Outsourcing Agreement must grant CIMA full audit access to the outsourced function, wherever it is physically located.
Post-Licensing Development
Obtaining the license is an endorsement of the VASP’s governance. The next strategic step is leveraging this compliance status.
Institutional Outreach: The CIMA VASP License is a key credential for attracting institutional liquidity providers, hedge funds, and sophisticated corporate clients who prioritize regulatory certainty.
Global Expansion: The Cayman license facilitates easier subsequent licensing or registration in other jurisdictions, often benefiting from regulatory “passporting” or mutual recognition due to the jurisdiction’s FATF-compliant status. The rigorous CIMA approval process serves as a de facto certification of global compliance readiness.
Securing Your Future in Digital Finance
The Cayman Islands Crypto License under the robust VASP Act is the definitive requirement for serious players in the virtual asset sector. The move to mandatory licensing, combined with strict AML/CFT protocols and the requirement for demonstrable substance, ensures that only credible and well-governed entities operate from the jurisdiction. Navigating the CIMA REEFS application, meeting the Fit and Proper standards, and establishing resilient cybersecurity and asset segregation systems requires expert guidance. Successfully obtaining this license is not merely a legal hurdle, but a strategic commitment to long-term regulatory integrity and global competitiveness.
FAQ
The primary governing law is the Virtual Asset (Service Providers) Act, 2020 (VASP Act). This is dedicated, specific legislation, not an adaptation of older financial laws.
The sole regulatory authority is the Cayman Islands Monetary Authority (CIMA). All Virtual Asset Service Providers (VASPs) must be registered or licensed by CIMA.
No. CIMA VASP Registration is the initial, mandatory authorization for most VASPs. A full VASP License is required for higher-risk activities, such as operating a Virtual Asset Trading Platform (Exchange) or providing large-scale Custody Services.
Minimum Capital Requirements CIMA are set by the Authority and depend on the specific services offered and the scale of operation. They must be demonstrated as unimpaired capital held by the VASP.
Yes. CIMA rigorously enforces local economic substance requirements. This includes maintaining a physical office, appointing qualified personnel, and demonstrating that Core Income Generating Activities (CIGA) are conducted locally.
The Timeline for Cayman VASP approval for initial registration typically ranges from 3 to 6 months, while securing a full VASP License can take 6 to 12 months, depending on the complexity and completeness of the submission.
Yes. Compliance with the FATF Travel Rule is mandatory under the VASP Act. VASPs must implement specialized RegTech solutions to collect and share originator and beneficiary data for crypto transfers.
Yes. Every registered or licensed VASP is subject to the rigorous Cayman Islands AML audit, which must be conducted by an approved external auditor to verify the effectiveness of the AML/CFT compliance program.
Token issuance is regulated under various laws. If the issuance involves ongoing services like transfer, exchange, or custody, the issuer typically falls under the requirements of the VASP Act and must obtain CIMA authorization.
The main advantages are global regulatory credibility (due to CIMA's strict adherence to FATF standards), political stability, a robust legal system, and tax neutrality (no corporate, income, or capital gains tax).