Cryptolicense in the Cayman Islands: Navigating Regulatory Waters

Cayman Islands have a relatively light-touch licensing and registration regime for any person offering virtual asset services while conducting business using a Cayman Islands entity or from within the Cayman Islands. Such persons are known as Virtual Asset Service Providers (VASPs), which are governed by the Virtual Assets (Service Providers) Act, 2020 (2022 Revision) (VASP Act).

Certain provisions of the VASP Act commenced in October 2020 and January 2021. The commencement of these provisions signified the implementation of the Phase 1, which was an AML, CFT and cybersecurity-focused registration regime.

Phase 2 (which is not implemented yet) of the VASP Act includes: a licensing regime for virtual asset trading platforms and custodians, an issuance approval regime for virtual asset issuers and a sandbox regime for innovative financial technologies.

The Cayman Islands Monetary Authority (CIMA) is responsible for regulating financial and cryptocurrency sectors in the country.

There are rules for VASPs in the Cayman Islands, which are governed by the VASP Act, 2020 (2022 Revision)

Key Numbers about Cryptolicense in the Cayman Islands

10-12 weeks

average term of obtaining license

no

minimum share capital

0%

capital gains tax (CGT) rate

0%

corporate income tax (CIT) rate

0%

personal income tax (PIT) rate

0%

value added tax (VAT) rate

Legal Opinion about Cryptolicense in the Cayman Islands

Ganna Voievodina

Manimama, CEO

"I encourage you to obtain a cryptocurrency license in the Cayman Islands as this can provide a number of benefits including regulatory clarity, increased trust and access to the jurisdiction's favorable tax and legal environment. All in all, securing this license is an important step for those companies seeking to establish a legitimate presence in the cryptocurrency industry while operating in a well-regulated and globally respected jurisdiction. The Manimama team is ready to help you get that cryptolicense".

New Possibilities with VASP status

Issuance of virtual assets: VASPs can sale of newly created virtual assets to the public in or from within the Caymans in exchange for fiat currency, other virtual assets or other consideration but it does not include the sale of virtual service tokens.

Exchange between one or more other forms of convertible virtual assets: VASP license holders can provide the process of swapping different types of convertible virtual assets with each other.

Virtual asset custody service: VASPs may offer safekeeping or administration of virtual assets or instruments that enable the holder to exercise control over the virtual assets.

Exchange between virtual assets and fiat currencies: VASPs offer the conversion between virtual assets and fiat currencies, offering customers the flexibility to transact in multiple currencies.

Transfer of virtual assets: any transaction carried out on behalf of an originator with a view to making the virtual asset available to a beneficiary.

Participation in, and provision of, financial services related to a virtual asset issuance or the sale of a virtual asset: VASPs can engage in and offering various financial activities associated with the issuance and sale of virtual assets.

Choose the Package of Services

Advanced

Set up of company ready to start cryptocurrency operational activity

€35,000

  • Company formation in the Cayman Islands
  • Individual AML/KYC policies
  • Company secretary for 1 year
  • Registered agent and local registered office for 1 year
  • VASP application submission
  • Policies for obtaining a license
  • Opening C2B account for crypto activities
Order now

Basic

Creating the company and registration of VASP

€20,000

  • Company formation in the Cayman Islands
  • Standard AML/KYC policies
  • Company secretary for 1 year
  • Registered agent and local registered office for 1 year
  • VASP application submission
Order now

Connect with our experts

By clicking the button, I confirm that I have read the privacy policy and consent to the collection and processing of my personal data in accordance with the GDPR rules.

Our Experts in this Area

Step by Step Description

Step 1. Initial setup

    We need such preliminary documents from the client for a company incorporation:

  • Preferred company name
  • Business plan
  • Passport copies from all directors and shareholders
  • Utility bills from all directors and shareholders
  • CVs of shareholders and directors
  • Source of funds confirmation
  • Confirmation letter of business activity
Duration: 5-10 business days

Step 2. Registration of the company

  • Preparation of corporate documents
  • Filing with the Cayman Islands General Registry a registration statement
  • Company registration
  • Obtaining a stamped documents and Certificate of Registration
  • Set up of accounting services
Duration: 7-10 working days

Step 3. VASP registration

  • Completing the application and AML/CFT form for the CIMA (can be done through the REEFS - CIMA's online platform)
  • Registration in the CIMA upon payment of the application fee
  • Communication with the CIMA
Duration: 10-12 weeks

Step 4. Opening C2B account for crypto activities (performed together with Step 3)

  • Review the most appropriate banks/EMIs, comparing the bank's risk appetite with the client's risk appetite based on previously prepared AML policies
  • Gather the required documents from the client to start the process (utility bill, source of wealth, fund flow, description of the purpose of account opening, key partners, company website etc.)

Duration: 4-5 weeks

Understanding Requirements in the Cayman Islands

To run a crypto business in the Caymans - you need to be registered or licensed by the CIMA

In order to conduct crypto business in the Cayman Islands, companies must be registered or licensed by the CIMA. Below, we take a look at the basic requirements:

  • Notarized copies of passports of all members
  • Notarized copies of address proof of all members
  • Business plan
  • Confirmation letter of business activity
  • Source of funds (current job, position, company’s name and business activities, working countries, years of employment – a CV is sufficient)
  • AML Manual of KYC/AML to set out AML compliance policies and procedures
  • Such policies as Information Security Policy, Private Key Storage Policy, Cybersecurity Program Policy
  • Requirements for VASPs in the Cayman Islands

    The company must have a physical presence in the country and comply with AML/CTF rules

    The requirements for the activity of VASPs are the following:

    • registered office in the Cayman Islands
    • having proper senior officers, trustees, beneficial owners and appointing such persons only with the approval of the CIMA;
    • complying with AML legislation that deal with ML, TF and PF as well as the implementation of AML systems and procedures and the appointment of an officer responsible for procedures to combat ML, TF and PF
    • when performing a transfer of virtual assets, a VASP shall collect and maintain information on the beneficiary and originator of the transfer in accordance with the AML law and any additional information specified by the CIMA, for all transfers performed and comply with any other requirements outlined therein
    • VASP shall ensure the accuracy of communications relating to virtual asset services
    • no shares totalling 10 % or more of the total shares in a company which is a VASP under the VASP Act shall be issued, and no issued shares or interests shall be voluntarily transferred or disposed of, without the prior approval of the CIMA
    • a VASP shall not engage in securities investment business unless the person is registered or is a licensee under the Securities Investment Business Act (2020 Revision) (SIBA) or has been exempted from registration or licensing by the CIMA
    • VASP must secure the personal data and virtual assets of clients
    • providing an audit report, prepared by an independent auditor, on AML systems and procedures for compliance with the AML regulations
    • In addition, the VASP Act has specific requirements for virtual asset trading platforms and virtual asset custody services

    Taxes in the Cayman Islands

    The Cayman Islands does not have specific tax laws related to virtual assets

    The Cayman Islands is a classic tax haven with no taxes at all. There is NO:

  • corporate income tax
  • personal income tax
  • capital gains tax
  • withholding tax on dividends or interest payments
  • value added tax
  • payroll tax
  • property tax
  • inheritance tax
  • gift tax
  • Client Feedbacks

    "The team at Manimama goes above and beyond to ensure client satisfaction, consistently delivering results that speak volumes about their dedication and expertise".

    "Manimama truly delivers excellence in every aspect of their work. If you are looking for a trusted partner that will do whatever it takes to ensure your success, take a look".

    "Manimama lawyers exemplify professionalism, dedication and an unwavering commitment to achieving the best results for its clients. Thanks to Manimama, not only did I get positive results, but I felt supported every step of the way".

    Our Latest Legal Researches

    How to obtain a cryptocurrency license in Slovakia

    Tax Summary: What law/s governs VASP activities? What activities are included in VASP services? According to Article 5 of the Anti-Money Laundering Law, VASPs are classified as follows: However, this act does not define the activities carried out by these categories of VASPs. Who is the VASP regulator? What is the procedure for registering a…

    May / 16 / 2024
    Read more

    Analysis and description of the Lithuanian AML Law in the Ukrainian version

    Dear Friends! We at Manimama Legal and Growth Agency decided to prepare a full analysis and description of the Anti-Money Laundering Law (AML) of Lithuania as the main jurisdiction where our clients register VASP companies. We enclose the document in Ukrainian so that our Ukrainian-speaking clients can fully understand what is given in the basic…

    May / 14 / 2024
    Read more

    How to obtain a cryptocurrency license in Romania

    Tax Summary: What law/s governs VASP activities? What activities are included in VASP services? According to Clause 2(t) of Article 2 and Clause 1(g) of Article 5 of the AML Law, as well as the Amendment Ordinance, the types of VASP activities are as follows: Who is the VASP regulator? What is the procedure for…

    May / 09 / 2024
    Read more

    Contact Us

    If our proposal is intriguing, we kindly request to complete the form provided below to learn more. By doing so, we guarantee access to a comprehensive commercial personalized offer, featuring up-to-date prices and detailed information.

    We look forward to the opportunity of collaborating and delivering exceptional solutions that meet and exceed expectations of any Client.

    The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.