{"id":153702,"date":"2026-10-30T10:02:44","date_gmt":"2026-10-30T10:02:44","guid":{"rendered":"https:\/\/www.legal500.com\/guides\/?post_type=comparative_guide&#038;p=153702"},"modified":"2026-10-30T11:11:43","modified_gmt":"2026-10-30T11:11:43","slug":"cayman-islands-blockchain-crypto-assets","status":"publish","type":"comparative_guide","link":"https:\/\/www.legal500.com\/guides\/chapter\/cayman-islands-blockchain-crypto-assets\/","title":{"rendered":"Cayman Islands: Blockchain &amp; Crypto Assets"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-153702","comparative_guide","type-comparative_guide","status-publish","hentry","guides-blockchain-crypto-assets","jurisdictions-cayman-islands"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">NXT Law<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/11\/Logo-NXT-Law-Black-no-device-1.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">NXT Law<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/11\/Logo-NXT-Law-Black-no-device-1.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Blockchain &amp; Crypto Assets laws and regulations applicable in Cayman Islands<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please provide a high-level overview of the blockchain market in your jurisdiction. In what business or public sectors are you seeing blockchain or other distributed ledger technologies being adopted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Cayman Islands has emerged as a leading global financial centre for blockchain and virtual asset businesses, leveraging its reputation as an innovative and business-friendly jurisdiction. Already home to over 70% of the world\u2019s offshore investment funds, the territory has become an obvious and popular choice for establishing cryptocurrency and blockchain projects, including fintech platforms, tokenised asset projects, exchanges, liquidity providers, custodians, blockchain network infrastructure, and entities serving as legal wrappers for decentralised autonomous organisations (DAOs).<\/p>\n<p>Cayman foundation companies have proven to be a highly adaptable and flexible structure which has clear advantages over most other corporate vehicles in dealing with decentralisation and project launches, including for subsidiaries incorporated in other jurisdictions (such as BVI, Panama or Costa Rica) involved in token issuance or operation of smart contract powered systems.\u00a0 Adoption of blockchain is also evident in financial services (e.g., tokenised investment funds, DeFi lending, stablecoins), real estate (crypto payments and tokenisation), gaming, and supply chain management.<\/p>\n<p>The jurisdiction is particularly attractive for institutional-grade businesses and sophisticated investors based outside the Cayman Islands, with significant adoption in the investment funds sector where fund managers are establishing crypto funds with various open and closed-ended strategies that can deploy capital into the sector. Regulated fund numbers continue to grow to ~32,000, including over 13,000 mutual funds and over 18,000 private funds. There is a deep pool of talent amongst service providers supporting blockchain businesses.<\/p>\n<p>The public sector has shown limited direct adoption to this point but support for initiatives within the Government of the Cayman Islands and in schools and other local initiatives is strong with blockchain or other distributed ledger technologies seen as growth sectors for the Cayman Islands.<\/p>\n<p>Private initiatives such as Cayman Enterprise City and Tech Cayman support blockchain infrastructure and development by giving development teams a seamless option to put staff in the Cayman Islands to build and support locally based blockchain and other distributed ledger projects.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please outline the principal legislation and the regulators most relevant to the use of blockchain technologies in your jurisdiction. In particular, is there any blockchain-specific legislation or are there any blockchain-specific regulatory frameworks in your jurisdiction, either now or envisaged in the short or mid-term?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The primary blockchain-specific legislation is the Virtual Asset (Service Providers) Act (Revised) (the VASP Act), which substantially aligns with international standards set by the Financial Action Task Force (FATF). The VASP Act regulates virtual asset issuance, exchanges, custody and transfers.<\/p>\n<p>Phase two of the VASP Act took effect on 1 April 2025 and requires a Cayman Islands Monetary Authority (CIMA) licence for virtual asset custodians and virtual asset trading platforms. The Virtual Asset (Service Providers) (Amendment) Act, 2024 also took effect on 1 April 2025 and applies to all virtual asset service providers (VASPs).<\/p>\n<p>Three amendment Acts were passed by Parliament in March 2026 and gazetted on 24 March 2026: the Virtual Asset (Service Providers) (Amendment) Act, 2026, the Mutual Funds (Amendment) Act, 2026 and the Private Funds (Amendment) Act, 2026. They bring tokenised interests in regulated mutual funds and private funds under the funds legislation rather than the VASP Act. The 2026 VASP amendment also repeals the Virtual Asset (Service Providers) (Amendment) Act, 2025, which had not commenced.<\/p>\n<p>Other relevant legislation includes the Securities Investment Business Act (SIBA), the Mutual Funds Act, the Private Funds Act, the Money Services Act, the Proceeds of Crime Act and the Anti-Money Laundering Regulations.<\/p>\n<p>CIMA is the primary regulator. CIMA&#8217;s Market Conduct Rule and Statement of Guidance, published in February 2026, applies to all authorised VASPs. CIMA&#8217;s AML\/CFT compliance rule and sanctions rule, published on 20 July 2026, took effect on 18 September 2026. The Cayman Islands Government remains supportive of responsible blockchain innovation.<\/p>\n<p>CIMA&#8217;s permanent rules for tokenised investment funds are pending. Phase three of the VASP regime, anticipated to include a sandbox licence and rules for the public issuance of newly created virtual assets, has no set date.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current attitude of the government and of regulators to the use of blockchain technology in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Cayman Islands Government, CIMA, and industry bodies such as Cayman Finance and the Blockchain Association of the Cayman Islands continue to support the attraction and growth of virtual assets business in the jurisdiction.<\/p>\n<p>The Government maintains a balanced approach, seeking to attract virtual assets business while upholding the Cayman Islands&#8217; high standards of financial probity and transparency. The 2026 amendments, which bring tokenised funds within the existing funds framework, show the Government adapting the framework to new technology while keeping appropriate oversight.<\/p>\n<p>CIMA combines supervision with rule-making. It completed a thematic desk-based review of 11 regulated VASPs in November 2025, which found opportunities for improvement in corporate governance, cybersecurity and asset custody. It published the Market Conduct Rule and Statement of Guidance in February 2026 and, in July 2026, two binding rules on AML\/CFT and financial sanctions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a central bank digital currency (\u2018CBDC\u2019) project in your jurisdiction? If so, what is the status of the project?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no central bank digital currency (CBDC) project in the Cayman Islands as at October 2026. Neither CIMA nor the Cayman Islands Government has announced a CBDC plan or pilot. The jurisdiction focuses on regulating private virtual assets rather than issuing a sovereign digital currency.<\/p>\n<p>The amended Common Reporting Standard regulations, which took effect on 1 January 2026, bring CBDCs and certain e-money products within reporting scope. They do not establish a Cayman CBDC.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and decentralised finance (\u2018DeFi\u2019) for the purposes of financial regulation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The VASP Act does not restrict the use of any category of virtual asset. Its requirements apply to the issuance of virtual assets and to specified virtual asset services: exchange between virtual assets and fiat currency; exchange between virtual assets; transfer of virtual assets; custody; and participation in financial services related to virtual asset issuance or sale.<\/p>\n<p>Custodians and virtual asset trading platforms must hold a CIMA licence under the Phase two regime, which took effect on 1 April 2025. Other VASPs must register with CIMA. CIMA&#8217;s Market Conduct Rule and Statement of Guidance, published in February 2026, sets conduct requirements for all authorised VASPs on conflicts of interest, client asset safeguarding, marketing, complaints, public disclosures and insurance. Custodians must segregate client assets, and trading platforms must maintain market abuse surveillance and transparent pricing.<\/p>\n<p>Tokenised funds sit outside the VASP Act. Under the 2026 amendments, digital equity tokens issued by regulated mutual funds and digital investment tokens issued by regulated private funds are regulated under the Mutual Funds Act and the Private Funds Act. A tokenised fund needs separate VASP registration or licensing only if it offers other virtual asset services, such as custody, exchange or issuance to the public. A business registered or licensed under the VASP Act may be exempt from separate SIBA registration, and the reverse, under the supervised-person waiver in section 16 of the VASP Act.<\/p>\n<p>DeFi is regulated where it involves custodial or platform services, and institutional DeFi is growing through tokenised funds and lending protocols. Peer-to-peer DeFi platforms without custody or central order books are generally outside the regime.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and DeFi for the purposes of anti-money laundering and sanctions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The VASP Act aligns with FATF standards for anti-money laundering (AML) and counter-terrorist financing (CFT). VASPs must appoint an AML Compliance Officer (AMLCO), a Money Laundering Reporting Officer (MLRO) and a Deputy MLRO. Relevant VASPs must also comply with the Travel Rule, which requires sharing and holding of originator and beneficiary information for certain transfers.<\/p>\n<p>CIMA&#8217;s Rule on Effective Compliance Programme for AML\/CFT and its Rule on Compliance with Financial Sanctions were published on 20 July 2026 and took effect on 18 September 2026. They are binding on all financial services providers regulated by CIMA, including VASPs, and supplement the Anti-Money Laundering Regulations. Under the rules, a firm&#8217;s governing body must designate an AMLCO, MLRO and Deputy MLRO, update risk assessments after trigger events, maintain independent audits with reports filed with CIMA, and train relevant staff at least annually. Customer due diligence procedures must include electronic KYC verification, which is permitted on a risk-based approach.<\/p>\n<p>The sanctions rule requires screening of applicants, customers, beneficial owners, connected persons and transactions against all applicable lists, including the UK Sanctions List, regardless of any simplified due diligence determination. Firms must freeze the funds and economic resources of designated persons without delay and file reports with the Financial Reporting Authority. Countries subject to UK, UN or US (OFAC) sanctions may not be rated low risk.<\/p>\n<p>VASPs must also submit an annual AML Return and a quarterly Travel Rule Return to CIMA. CIMA began desk-based reviews of AML\/CFT and sanctions controls in mid-October 2026 and expects updated AML\/CFT Guidance Notes by the end of 2026. Independent AML audit reports must be filed with CIMA as soon as practicable, and at least every third audit must be external.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and DeFi for the purposes of taxation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Cayman Islands imposes no corporate income tax, capital gains tax, withholding tax or VAT on virtual asset businesses, and profits earned outside the jurisdiction are not taxed locally. Beneficial owners may face filing obligations and taxes in their home jurisdictions, but locally the focus is on compliance rather than direct taxation.<\/p>\n<p>The Crypto-Asset Reporting Framework (CARF) took effect on 1 January 2026 under the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations, 2025 (SL 50 of 2025). Reporting crypto-asset service providers must register with the Department for International Tax Cooperation (DITC) by 30 April 2026 and designate a principal point of contact in the Cayman Islands. They must collect self-certifications from users and file annual returns by 30 June of the following year, so the first CARF return for 2026 is due by 30 June 2027. The primary penalty for non-compliance can reach US$50,000.<\/p>\n<p>The amended Common Reporting Standard, also effective 1 January 2026, brings crypto-assets within the definition of financial assets. Some controlling-person and reporting deadline provisions take effect in 2027.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to retail and wholesale tokenisation projects?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Tokenised investment funds have been a key area of legislative activity this past year. The 2026 amendments recognise digital equity tokens (for mutual funds) and digital investment tokens (for private funds) as digital representations of the whole of an investor&#8217;s interest. The underlying legal interest remains the source of rights and obligations. Tokenised mutual and private funds stay regulated under the Mutual Funds Act and the Private Funds Act, and must give CIMA an annual confirmation that token records are properly kept. Token transfers need approval from the fund operator, and offering documents must disclose token-specific risks such as cybersecurity and transferability. CIMA may inspect the tokenisation technology and token transactions.<br \/>\nCIMA&#8217;s permanent rules for tokenised investment funds are pending. In the meantime, CIMA applies temporary measures to all tokenised funds, consisting of a registration questionnaire and a limited set of conditions.<br \/>\nTokenised products that are not interests in a regulated fund require analysis under SIBA and the VASP Act on a case-by-case basis. Tokenised funds at present are a way to prepare for a future of 24\/7 trading, but they cannot currently be used to interface with DeFi systems or most centralised exchanges. As licensing grows and markets can list them, we expect most funds in the Cayman Islands to embrace tokenised models.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any prohibitions on the use or trading of cryptoassets in your jurisdiction? If permitted, is cryptoasset trading common?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no prohibitions on the use or trading of virtual assets in the Cayman Islands. The VASP Act explicitly reflects that cryptocurrencies and other virtual assets may be used freely.<\/p>\n<p>Parties that invest and trade in cryptocurrencies and other virtual assets for their own account, and parties that make and receive payments in cryptocurrencies, are not subject to specific regulation.<\/p>\n<p>Cryptoasset trading is common and actively supported, with the jurisdiction hosting numerous cryptocurrency funds, exchanges, and trading platforms. The regulatory framework is designed to facilitate rather than restrict crypto trading activities, provided appropriate licensing and registration requirements are met for virtual asset service providers.<\/p>\n<p>Virtual assets are accepted for payment in various venues in the Cayman Islands and have also been supported in real estate transactions.\u00a0 Many web3 service providers, including the authors of this piece, accept virtual assets, including stablecoins, as part of normal operations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent have initial coin offerings (\u2018ICOs\u2019) taken place in your jurisdiction and what has been the attitude of relevant authorities to ICOs? If permissible, what are the key requirements that an entity would need to comply with when launching an ICO?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>ICOs are permissible in the Cayman Islands. Under the VASP Act, the issuance of newly created virtual assets to the public for consideration is a virtual asset service that requires registration or licensing with CIMA. The Act distinguishes private sales, which are not advertised and are sold to a limited number of persons by private agreement, and certain private sales may fall outside registration. Rules for public issuance are anticipated under the proposed Phase three of the VASP regime but have no set date.<\/p>\n<p>Key requirements for a public sale include CIMA registration or licensing under the VASP Act, compliance with AML\/CFT obligations, appointment of an AML Compliance Officer, MLRO and Deputy MLRO, maintaining a registered office in the Cayman Islands, and a governance structure with at least three directors, one of whom is independent and has no vested interest in the VASP.<\/p>\n<p>Given these requirements and the time taken to obtain registration, it is more common to see a Cayman foundation with a BVI issuer conducting the token issuance as BVI provides an exemption pathway for the issuance and sale, and the Cayman foundation provides a vehicle to receive the proceeds of the sale and continue management of the project post-sale.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any legal or regulatory issues concerning the transfer of title to or the granting of security over cryptoassets?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While the Cayman Islands courts have not yet been specifically required to address whether virtual assets should be classified as property under common law or statutory provisions, the Grand Court has demonstrated familiarity with virtual asset matters. In the case of <em>In the Matter of Atom Holdings Ltd<\/em>, Cause No. FSD 54 of 2023, the Court&#8217;s order appointing joint provisional liquidators included &#8220;digital assets&#8221; in the description of &#8220;property of the Company.&#8221;\u00a0 It is likely the Grand Court will follow the common-law decisions finding that virtual assets are choses in action capable of being the subject of ownership and proprietary remedies.<\/p>\n<p>No major regulatory barriers exist for the granting of security over virtual assets, but cross-border enforcement and valuation challenges may arise as the evolving legal framework continues to develop further clarity around ownership rights and security interests in virtual assets.<\/p>\n<p>Unreported cases in the Grand Court of the Cayman Islands have treated virtual assets as property capable of being the subject of proprietary injunctions (for example <em>Target Global Growth Fund II SCSP-RAIF and Antler Global Fund Master Fund SICAV-RAIF v Liu Xun<\/em> [2025] CIGC (FSD) 45).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are smart contracts characterised within your legal framework? Are there any enforceability issues specific to the operation of smart contracts which do not arise in the case of traditional legal contracts?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Smart contracts operate within the Cayman Islands&#8217; common law framework, which is based on English law principles. While there is no specific legislation addressing smart contracts, they are generally treated as contracts that may be enforceable under traditional contract law principles, provided they meet the essential elements of a valid contract.\u00a0 Meeting those elements involves considering offer, acceptance, notification of terms, consideration, the type of contract formation (unilateral versus bilateral), intention to create legal relations as well as interpretation of code versus intent, as well as remedies for unexpected operations, bugs or errors in smart contract code.<\/p>\n<p>The Electronic Transactions Act recognises electronic signatures as being equivalent to traditional execution of contracts and is flexible enough to accommodate emerging authentication protocols and tools, which should encompass agreeing to smart contract terms (noting this has not yet been tested in Court).<\/p>\n<p>The jurisdiction is exploring how smart contracts might integrate further with traditional legal mechanisms &#8211; for example, whether powers of attorney could be embedded in smart contracts, though current legislation such as the Powers of Attorney Act (1996) may need updating for the digital age. The legal framework continues to evolve to address the unique characteristics of smart contracts while maintaining legal certainty.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are Decentralised Autonomous Organisations (\u2018DAOs\u2019) treated in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Cayman Islands has recognised the historical importance of DAOs in the virtual asset ecosystem, with entities, such as foundation companies, commonly serving as legal \u201cwrappers\u201d for DAOs for legal personality and liability protection or participating in DAO governance. \u00a0The popularity of DAOs has reduced, but a number of significant DAOs use Cayman Islands wrappers.<\/p>\n<p>While there is no specific DAO legislation or requirements, the jurisdiction&#8217;s flexible Foundation Companies Act (Revised) allows for various structures to accommodate DAO operations with tailored by-laws, memorandums and articles of association permitting great customisation for projects and communities. The VASP Act can apply to wrapped DAOs that provide virtual asset services, requiring appropriate registration or licensing.\u00a0 A DAO without a foundation wrapper is highly likely to be treated as a partnership, consistent with the rationale set out in US caselaw.<\/p>\n<p>If outside of the VASP regime, most DAOs remain unregulated, making the jurisdiction versatile for decentralised projects structure and arrangements where traditional legal entities interface with DAO governance mechanisms, providing legal certainty while enabling their decentralised operations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Have there been any governmental or regulatory enforcement actions concerning blockchain in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>CIMA has taken enforcement action under the VASP Act, including public notices against unregistered platforms such as Gate.io in April 2025 and licence revocations for non-compliance. Courts have issued freezing and disclosure orders in crypto-related insolvencies, such as AXIA Network Foundation (in voluntary liquidation). CIMA&#8217;s powers include licence conditions, cease-and-desist orders, licence revocation, cancellation of registration, withdrawal of waivers and action against misleading public statements about regulatory status, as set out in CIMA&#8217;s revised Regulatory Policy effective 23 May 2025.<\/p>\n<p>CIMA&#8217;s supervisory activity increased in 2025 and 2026. It issued a supervisory circular on AML\/CFT inspections of VASPs in September 2025, a rule and regulatory procedure on cancelling VASP licences and registrations in September 2025, and a thematic desk-based review of 11 regulated VASPs in November 2025. CIMA&#8217;s approach remains focused on compliance, registration and licensing, with enforcement used where firms fall short of those standards.<\/p>\n<p>CIMA&#8217;s first-round inspections of VASPs found good compliance in many areas but notable deficiencies in customer risk assessment, sanctions screening, due diligence, transaction monitoring and record keeping. As at 31 July 2025, 19 VASPs were registered in or from the Cayman Islands.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other generally-applicable laws, case law or regulations that may present issues for the use of blockchain technology (such as privacy and data protection law or insolvency law)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Several generally applicable laws may impact blockchain operations in the Cayman Islands. Data protection considerations arise from the Data Protection Act, which may affect how personal data is processed on blockchain networks. Insolvency law presents particular considerations for virtual assets, as seen in cases like In the Matter of Atom Holdings, where virtual assets were recognised as company property subject to insolvency proceedings.<\/p>\n<p>Corporate law requirements, including director duties and corporate governance standards, apply to blockchain companies. The jurisdiction&#8217;s AML\/CFT framework extends beyond the VASP Act to general AML regulations under the Proceeds of Crime Act.<\/p>\n<p>Additionally, traditional securities laws under SIBA may apply depending on the nature of tokens or virtual assets involved, and the Money Services Act may be relevant for certain cryptocurrency exchange activities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other key issues concerning blockchain technology in your jurisdiction that legal practitioners should be aware of?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Legal practitioners should be aware of several key developments. Tokenised fund legislation was passed in March 2026 and brought into force on 24 March 2026, but CIMA&#8217;s permanent rules for tokenised investment funds are still pending. Digital equity tokens and digital investment tokens are now statutory terms, and offering documents must disclose token-specific risks such as cybersecurity and transferability. CARF has applied since 1 January 2026, with the first registration deadline of 30 April 2026. CIMA&#8217;s AML\/CFT and sanctions rules took effect on 18 September 2026, and CIMA&#8217;s desk-based reviews from mid-October 2026 will test whether those programmes operate effectively, not only whether written policies exist.<\/p>\n<p>The Market Conduct Rule and Statement of Guidance for VASPs, published in February 2026, requires practitioners to map existing custody and trading platform obligations to the new conduct provisions. Phase three of the VASP regime, anticipated to add a sandbox licence and rules on public issuance, has no set date.<\/p>\n<p>Practitioners should also note thin jurisprudence on virtual asset property and enforcement, cross-border coordination needs, the link to UK law and international standards, and global shifts (in particular US deregulation) potentially impacting offshore demand. Robust governance remains critical, including ensuring supervisors and boards of foundation companies are separate and distinct, meeting high cybersecurity standards, and structuring client asset segregation correctly.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">3639<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/153702","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=153702"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}