The region’s leadership is improving the legislative framework, which will help attract crypto-assets and other instruments from companies in this field. Today, the Caymans are considered one of the main points on the globe where not only investment funds, but also the fintech industry is actively developing. For companies from this sphere, it is a great opportunity for development. For the government, it is additional cash flows that will help develop the local economy.
One of the main elements in the fintech industry is crypto-assets. Since in many countries, there is no precise legislation for its regulation, enterprises of this industry work through gray schemes. However, the Caymans have already adopted several laws that help to properly regulate this process. First of all, we are talking about the Regulation of cryptocurrency markets and the prevention of abuse of cryptocurrency.
Working with virtual assets in Cayman
This country adheres to global standards regarding money laundering issues and tries to prevent such situations. Due to this, a law on virtual assets has been introduced. With its help, players in this market will be able to get clear rules of work, and the supervisory authority will know what aspects to pay attention to.
According to this legislation, companies need to register and obtain a VASP license in Cayman from the regulatory authority. At the same time, applicants will be able to obtain a license both to work with these assets and to provide services in this market.
Virtual assets are digital equivalents of the value of goods. They can be used as a trading element in transactions or they can be transferred as a virtual payment or investment. But we are not talking about virtual equivalents of fiat currencies. For example, the crypto market can be referred to as such a definition. But to conduct transactions with it you need to get a crypto license in the Cayman Islands from the staff of the crypto regulatory authority.
In addition, companies need intermediaries who will provide services with these types of assets. In this region, intermediaries are allowed to:
- exchange virtual and fiat assets;
- exchange one currency for another using the cross rate of a stable currency;
- provide services for asset custody;
- provide other services in the market.
All these companies need to obtain licenses and only then they will be able to operate in the local market. But before doing so, it is best to consult with representatives of the regulatory body, because they may initially need to register with the currency board.
Commitments of cryptocurrency companies in the market
To date, the regulator is considering 18 applications from applicants who wish to obtain a crypto license and operate in the market. Last quarter, 6 new licenses were issued, which means that this market is actively growing. However, it is not so easy to obtain such a document. One needs to meet many requirements that will be put forward by the representatives of the controller. In particular, licensees need, even after receiving the permit:
- audit their systems after receiving a request from the controller;
- all management positions in the company must be held by professionals who have sufficient experience and skills for the job (they are only approved for the position after the controller has confirmed that they can comply with their requirements);
- notify the controller of any suspicious transactions;
- send audited accounts annually to the comptroller’s office on the dates specified by the comptroller;
- not to issue shares or conduct transactions without prior authorization from representatives of the supervisory authority.
Only companies that comply with these requirements will be able to operate in this market and receive all available benefits.
Expected changes in crypto regulation
Recently, there have been more and more frequent reports that new laws may be adopted in this region, which will help to further improve the work for companies. In particular, there is talk of a so-called license regime with a limited validity period. Such an initiative is being actively considered and there will be fewer requirements for companies to obtain it. Moreover, they will be able to obtain it much faster.
It is also possible to adopt a law on the creation of a special economic zone for companies from the fintech sector. It is assumed that such companies will be able to process payments and conduct transactions in cryptocurrency faster. This initiative is necessary because almost 300 companies will be able to work in this zone. So far, they all work according to the accepted rules and receive a VASP license.
Who can help with the registration of permits
As you can see, in the Caymans it is necessary to register a company to comply with many requirements before obtaining a license. Even after the license is issued, there are a lot of reports that need to be filed and legal advice is essential.
We recommend that you contact our staff on this matter. Each of them is an expert in this industry and will be able to not only check your documents but also point out the deficiencies and correct them before applying for a license. With us, you will get the license for the first time and while your competitors will be busy correcting mistakes, you will already conduct your first transactions.
