Cayman Islands

**Exchanges/Trading Platforms**: Full VASP **license** required if operating a virtual asset trading platform under the VASP Act; grant fee of 100,000 KYD (~120,000 USD).[3][5][6]

**Custody Providers**: Full VASP **license** mandatory; grant fee of 30,000 KYD (~36,000 USD).[1][3][5]

**Payment Processors**: **Registration** suffices for basic services without custody or trading (e.g., transfers); license needed if involving custody or platforms. Fees start at 1,500–15,000 KYD for registration, up to 200,000 KYD for licenses based on scale.[5]

**Capital**: No fixed minimum share capital generally required, though CIMA may demand proof of adequate net assets; one source notes 100,000 USD minimum paid-up capital.[2][3][5]

**AML/KYC**: Mandatory local AML compliance officer; annual AML audits; fit-and-proper checks on owners/directors/shareholders (KYC docs, non-criminal records, references).[2][3][5][7]

**Local Presence**: Registered office in Cayman Islands required; no physical office, local staff, or residency mandates; at least one CIMA-approved director (especially for custody).[2][3][5]

**Other**: Client asset protection, risk/cybersecurity management, insurance; business plan, financial projections (2 years), org chart; annual audited statements if requested.[2][3][5]

Incorporate Cayman entity (e.g., exempted company) with registered office.[2][3]

Prepare package: Business description, products/services, financials/projections, customer info, KYC on directors/shareholders (passports, CVs, references), compliance plans (AML, risk, cybersecurity), org chart.[2][3][5]

Pay application fee (5,000 KYD); submit to CIMA.[2][7]

CIMA review by Management Committee (weekly meetings); respond to queries.[7]

Pay grant fee upon approval; demonstrate ongoing compliance (e.g., AML officer, CISO).[3]

Receive authorization; annual fees/filings follow.[2]

Virtual Asset (Service Providers) Act (VASP Act): https://www.cima.ky/upimages/regulatorymeasures/RegulatoryPolicy-RegistrationorLicensingofVASPs_1716492494.pdf [7]

Virtual Asset Regulations 2025 [1]

CIMA guidance on fit-and-proper, compliance [2][7]

Stablecoins are classified as **virtual assets** under the VASP Act, as they represent digital value not as fiat currency but pegged to assets like fiat or securities; they are not explicitly e-money or payment tokens.[1][4]

If conferring specific rights (e.g., redemption or conversion), or pegged to securities, they may be classified as **securities** under the Securities Investment Business Act (SIBA), requiring dual VASP and SIBA authorization from CIMA.[1][3]

Issuers providing virtual asset services (e.g., issuance, sale) in or from the Cayman Islands must register or obtain a **VASP license** from CIMA; since April 1, 2025, custody services and trading platforms require a full "virtual assets service licence" (previously registration).[1][3][5][6]

Business plans, including issuance, need CIMA approval under Section 9 of the VASP Act (Revision 2024); changes require prior consent, and public offerings without authorization are prohibited.[4]

Tokenized funds (potentially including stablecoin-related) are excluded from VASP Act if registered under Mutual Funds Act or Private Funds Act, with CIMA oversight.[2]

No specific reserve requirements for stablecoins are mentioned; regulation focuses on general VASP compliance rather than stablecoin-specific backing mandates.[1][3][4]

No explicit rules on redemption rights; however, if a stablecoin structure includes redemption or conversion rights, it may trigger securities classification under SIBA.[1]

No distinct rules identified; algorithmic stablecoins fall under general virtual asset treatment per the VASP Act, subject to the same licensing and oversight.[1]

No information on CBDC (central bank digital currency) interaction with stablecoins in the regulatory framework.[1][2][3][4]

**Adopted and Effective Date**: Adopted via the Anti-Money Laundering (Amendment) (No. 2) Regulations, 2020, with Part XA commencing on July 1, 2022. CIMA issued guidance requiring VASPs to submit compliance plans by March 31, 2022.[1][2][3][4]

**Threshold Amounts**: USD 0; applies to **all** virtual asset transfers, defined as any transaction on behalf of an originator to make virtual assets available to a beneficiary.[1][2]

**VASPs Covered**: All VASPs registered or applying for registration/licensing with the **Cayman Islands Monetary Authority (CIMA)**, including obliged entities under the 2020 VASP Act (e.g., cryptocurrency exchanges, trading platforms, custodians). Covers transfers involving VASPs, other obliged entities, or non-obliged entities.[1][2][4][5]

**Technical Implementation Requirements**: VASPs must exchange specific originator and beneficiary data (e.g., identification, verification info) during transfers, maintain records for at least 5 years, and implement policies, procedures, and technological tools. Registrants submit compliance details to CIMA via email (vaspinfo@cima.ky) or REEFS portal (APP 101-84 Schedule E). Aligns with FATF Recommendation 16 and 2021 FATF guidance on private wallets, NFTs, and DeFi.[1][2][4][5]

**Penalties for Non-Compliance**: Not explicitly detailed in available sources; general AMLR penalties apply for breaches, with CIMA supervisory enforcement. Registration is mandatory for VASPs.[2]

**Primary Legislation**: Anti-Money Laundering Regulations (as revised), Part XA; Anti-Money Laundering (Amendment No. 2) Regulations, 2020.[1][2][3][4]

**CIMA Guidance**: Travel Rule Requirements notice (Feb 22, 2022); Sector Specific Guidance on VASPs (Sept 2023 revision); Guidance Notes on Prevention of Money Laundering/ Terrorist Financing (amendments).[2][4][5]

**Key Sources**: CIMA official page at https://www.cima.ky/travel-rule-requirements-for-vasp[4]; Cayman Finance overview at https://caymanfinance.ky/2025/01/06/virtual-asset-service-providers-and-the-travel-rule/[1]; 21 Analytics summary at https://www.21analytics.co/travel-rule-regulations/cayman-islands-travel-rule-regulation/[2]. No updates post-2023 indicate ongoing compliance as of 2026.[1][5]

**Court-supervised liquidations (April 3, 2025):** Cayman Grand Court ordered supervised liquidations of AXIA Network Foundation (ANF) and ANF MergeCo Ltd (crypto entities in the failed Axia Group) for efficacy in stakeholder interests; no regulatory penalty specified.[4]

**General CIMA fines trend:** Increase in administrative fines post-2022 amendments, e.g., September 2025 fines on Blacktower entities for AMLR breaches (non-crypto), and a prior KYD4M+ fine in 2021 (pre-2023).[3]

**Freezing assets** and reporting relationships or transactions involving designated persons/entities to the Cayman Islands Financial Reporting Authority (FRA), per the **Terrorism Act (2018 Revision)** and **Proliferation Financing (Prohibition) Act (2017 Revision)**.[2]

Implementing **sanctions screening policies** under the **Anti-Money Laundering Regulations (2020 Revision)** for entities conducting "relevant financial business," including checks against UK/Cayman lists (not just EU/UN/OFAC).[3][6]

CIMA advises FSPs (including VASPs) to note **OFAC**'s extraterritorial reach due to global USD/crypto transaction risks, though not legally binding locally; no crypto-specific exemptions apply under international regimes.[2][5][6]

**EU/UN compliance** is indirect via UK implementation; UNSCRs on terrorism/proliferation are enforced without delay.[2][3]

All Cayman persons/entities (including VASPs) must screen customers, counterparties, and transactions against applicable lists: UK sanctions (mirroring pre-Brexit EU/standalone UK regimes + UN), plus Cayman autonomous terrorist lists under **Terrorism Law (2018 Revision)**, **Proliferation Financing (Prohibition) Law (2017 Revision)**, and **Proceeds of Crime Law (2020 Revision)**.[3][6]

**Guidance on Targeted Financial Sanctions** (FRA): Details reporting/freezing duties; available via CIMA/FRA resources linked at https://www.cima.ky/sanctions-overview.[2]

Applies to any person in Cayman Islands, Cayman-registered entities/ships/aircraft, or Cayman-resident British nationals abroad.[3]

No standalone Cayman crypto list; relies on **CIMA's published consolidated list** of UK-extended Orders: https://www.cima.ky/sanctions-overview.[2][3]

Autonomous additions via local terrorism/proliferation laws (no crypto carve-outs).[3]

OFAC crypto designations (e.g., SUEX exchange, Blender mixer) are not binding but recommended for screening due to secondary risks: https://ofac.treasury.gov/sanctions-programs-and-country-information and https://sanctionssearch.ofac.treas.gov.[5][6][7][8]

UK mirrors UN/EU but post-Brexit includes standalone regimes; check CIMA for current Orders.[6]