In January 2021, the Cayman Islands introduced a compulsory licensing regime for Virtual Asset Service Providers (VASP) under the Virtual Asset (Service Providers) Act 2020 (the VASP Act). Consultation on draft rules and guidelines can be called the second phase of the regime.

“The proposed rule supports the regulatory requirements in the VASP Act by setting out obligations for both custodians and trading platforms in areas such as governance, conduct of business, prudential requirements, risk management, IT and cybersecurity. The rule also separately ascribes obligations to trading platforms and persons providing virtual-asset custody services as appropriate to the nature of their business,” write STEP.

The consultation also conducts a jurisdictional comparison of the proposed rules with those of the Bahamas and Bermuda, Gibraltar, Hong Kong, Liechtenstein, and Malta, as well as with the proposed regulation of the EU crypto-asset markets. According to CIMA, the Cayman Islands Monetary Authority, the proposed rules and supporting guidance will “provide clarity and certainty” to CIMA’s expectations for its oversight of custodians and VASP trading platforms.

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Source: step