Cayman Islands Crypto License
The legislative branch of the Cayman Islands government put into effect the Virtual Asset (Service Providers) Law, 2020 (“VASP Law”), on May 25, 2020. The VASP Law outlines the procedures for conducting virtual assets business operations within the Cayman Islands, including prerequisites for licensing and registration for individuals offering virtual asset services. The VASP Law aims to align the Cayman Islands with worldwide regulatory standards while ensuring consumer protection and adherence to the Financial Action Task Force recommendations regarding virtual assets. This will establish a robust and modern framework to govern virtual assets business operations within the Cayman Islands.
The Cayman Islands have become a popular destination for individuals and businesses seeking cryptocurrency-related activities. However, to operate a crypto business in the Cayman Islands, obtaining a Crypto License from the Cayman Islands Monetary Authority (CIMA) is necessary. This permission ensures compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) rules and provides regulatory oversight for the industry. This article will explore the conditions for obtaining a Crypto License in the Cayman Islands and its benefits to businesses seeking crypto-related activities.
The Cayman Islands is a British Overseas Territory located in the Caribbean Sea. It has become a popular destination for individuals and businesses seeking cryptocurrency-related activities. Here are some key advantages:
- Favorable Regulatory Environment;
- Stable Political and Economic Environment;
- Access to Banking Services;
- International Reputation;
- Tax neutrality;
- Full foreign ownership;
- Minimum requirements for incorporation and corporate management.
Service packages for registration of Crypto License in the Cayman Islands
Companies must obtain crypto permission from the CIMA to operate a crypto business in the Cayman Islands. This permission ensures compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) rules and provides regulatory oversight for the industry. This section will explore the basic requirements for obtaining a cryptocurrency license in the Cayman Islands.
- Scans of notarized copies of passports of all members
- Scans of notarized copies of address proof of all members
- Business plan
- Source of Funds: Current job, position, company’s name and business activities, working countries, years of employment – a CV is sufficient
- Confirmation Letter of Business Activity
- AML Manual of KYC/AML to set out AML compliance policies and procedures
- Information Security Policy, Private Key Storage Policy, Cybersecurity Program Policy
- Local AML Officer
- Local Registered Office
Process and timeline for obtaining a crypto licence in Cayman
5-10 working days
COLLECTION OF PRELIMINARY DOCUMENTS
- Documents required:
- Preferred company name
- Passport copies from all shareholders and directors
- Utility bills from all shareholders and directors
- CVs of shareholders and directors
- A business model of the company/Business plan
- Source of Funds confirmation
- Confirmation Letter of Business Activity
7-10 working days
COMPANY REGISTRATION
- Company registration
- Preparation of corporate documents
- Set up of accounting services
10-12 weeks
LICENSING
- Determination of suitable license type
- Collection of all related documentation
- Submission of the license application to the Regulator (Cayman Islands Monetary Authority – CIMA)
- Communication with the regulator
4-6 weeks
CORPORATE ACCOUNT OPENING
- *Done simultaneously with Stage 3
- Analysis of the most suitable Banks/EMIs, comparison of the risk appetite of the Bank in relation to the risk appetite of the Client based on previously prepared AML policies
- Collection of necessary documents from the Client side to initiate the process (flow of funds, source of wealth, description of the purpose of opening an account, key partners, company website, utility bill, etc.)
- Guiding the Client’s company through the entire process of opening an account
Opening a Cryptocurrency Company in the Cayman Islands
- Incorporation: The first step in opening a crypto business in the Cayman Islands is to incorporate a business. It can be incorporated as a limited liability company (LLC) or an exempted company. The business must maintain a physical presence in authority, meaning it must have a registered office in the Cayman Islands.
- Obtaining a Cryptocurrency License: To operate a crypto business in the Cayman Islands, companies must obtain a crypto license from the CIMA. To obtain a license, businesses must meet several conditions, including having a comprehensive business plan, adequate systems and controls to prevent tax avoidance and financing of terrorism, and meeting fit and proper criteria. Additionally, businesses must meet minimum capital conditions as set out by CIMA.
- Banking Services: Once a cryptocurrency license Cayman Islands has been obtained, the business can access banking services there. The authority has a well-developed banking sector and is home to many international banks. Access to banking services is crucial for businesses operating in the crypto industry, and the Cayman Islands offers a range of banking options.
- Compliance: Companies functioning in the crypto industry in the Cayman Islands must comply with anti-money laundering (AML) and counter-terrorism financing (CTF) rules. This includes implementing policies and procedures for identifying and verifying customers, monitoring transactions, and reporting suspicious activity to the relevant authorities.
Sandbox License in the Cayman Islands
The authority introduced a Sandbox License under the digital resource (Service Providers) Law (VASP Law) for innovation promotion.
Sandbox License
The Sandbox License is a regulatory option established by the CIMA to allow companies to test innovative products and services related to digital resources. The Sandbox License provides a temporary exemption from specific conditions under the VASP Law, allowing companies to test their products and services in a controlled environment. The Sandbox License is designed to promote innovation in the industry while ensuring that consumer protection and AML/CTF rules are maintained.
Digital Resource Services
Under the VASP Law, digital resource services are defined as any of the following:
- The issuance of digital resources, including the creation and placement of new digital resources into circulation;
- The trading or exchange of digital resources;
- The transfer of digital resources;
- The custodian or safekeeping of digital resources or tools enabling control over digital resources;
- Participation in and provision of financial assistance related to an issuer’s offer and/or sale of digital resources.
The VASP Law applies to businesses providing digital resource services in or from the Cayman Islands. Companies providing digital resource services must register with CIMA and comply with AML/CTF rules.
FAQ about crypto license in the Cayman Islands
Is cryptocurrency regulated in the Cayman Islands?
- Cryptocurrency is regulated in the Cayman Islands. Businesses seeking to engage in crypto-related activities must obtain a Crypto License from the CIMA and comply with anti-money laundering (AML) and counter-terrorism financing (CTF) rules.
How to register a cryptocurrency company in the Cayman Islands?
- The firm must be incorporated as a limited liability company (LLC) or an exempted company to register as a cryptocurrency business. The business must maintain a physical presence in authority, obtain cryptocurrency permission from the CIMA, and comply with anti-money laundering (AML) and counter-terrorism financing (CTF) rules. Firms must also meet minimum capital conditions and have adequate systems and controls.
Is cryptocurrency taxed in the Cayman Islands?
- No, there is currently no specific tax legislation in the Cayman Islands related to cryptocurrency. However, businesses engaged in crypto actions may be subject to other forms of taxation, such as corporate income tax or stamp duty on property transactions. It is recommended to consult with a tax professional for guidance on taxation related to crypto in the Cayman Islands.
How will the new laws change the regulation of cryptocurrencies in the Cayman Islands?
- The new laws, including the digital resource (Service Providers) Law (VASP Law) and the Companies (Amendment) Law, 2020, will enhance the regulatory framework for cryptocurrencies. The VASP Law requires registration for digital resource service providers and introduces a regulatory sandbox for testing new products and services.
Can I open a bank account for my crypto business in the Cayman Islands?
- Yes, companies operating in the crypto industry in the Cayman Islands can open a bank account in the authority. The Cayman Islands has a well-developed banking sector and is home to many international banks. However, businesses must obtain crypto permission from the CIMA and comply with anti-money laundering (AML) and counter-terrorism financing (CTF) rules.
