VASP Regime to Commence in Phases

Industry is advised that the Virtual Asset Service Providers (VASP) regulatory framework is being commenced in two phases. To accomplish this phased approach, the following were published on Wednesday, 28 October to bring into force certain provisions of the Virtual Asset (Service Providers) Law, 2020 (VASP Law):

Virtual Asset (Service Providers) Law, 2020 (Commencement) Order, 2020; ?
Virtual Asset (Service Providers) Regulations, 2020; ?
Monetary Authority (Amendment) (No.2) Law, 2020 (Commencement) Order, 2020; ?
Securities Investment Business (Amendment) Law, 2020 (Commencement) Order, 2020; ?
Mutual Funds (Amendment) (No.2) Law, 2020 (Commencement) Order, 2020

Phase one, which begins 31 October 2020, will focus on anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance, supervision and enforcement. Persons engaged in or wishing to engage in virtual asset services must be registered with CIMA under the VASP Law.
 
Persons engaged in or wishing to engage in virtual asset services currently holding a licence granted by CIMA under another regulatory law must notify CIMA under the VASP Law. Provisions of the VASP Law which relate to enforcement, penalties or offences will be commenced on 31 January 2021. Persons who have not registered or notified CIMA by the authority’s application deadline, but who are engaging in virtual asset services on and after 31 January 2021 will be subject to penalties and other enforcement measures.

Registration/notification is via the VASP Application Form on CIMA’s REEFS online platform. CIMA will publish a date by which applications have to be received in order to be considered prior to 31 January 2021.

Phase two, which is expected to begin in June 2021, will bring into force the remaining provisions of the VASP Law, including the licensing requirement for virtual asset custodians and trading platform operators, the sandbox licensing regime and other elements of the VASP Law.

The Virtual Asset (Service Providers) (Amendment) Bill, 2020, which will introduce provisions to better facilitate the phased commencement approach, was published on Thursday, 29 October and will be presented at the next sitting of the Legislative Assembly.

The Virtual Asset (Service Providers) Regulations, 2020 outlines the fee schedule and certain operational elements such as the VASP Application Form in Schedule 1.
 
The VASP framework allows Cayman to fulfil its commitments to the Caribbean Financial Action Task Force regarding compliance with global standards on AML/CFT and countering proliferation financing.

CIMA will issue a notice in the coming days which will provide additional information regarding the registration/notification requirements.