Cayman Islands: new laws on crypto for custody and trading

The Cayman Islands have introduced new laws for a regulatory tightening for crypto operators, imposing licensing obligations for trading and custody service providers.

The new laws, already approved by the local legislator, will come into effect from April 1, 2025.

New crypto laws and Licensing Obligations in the Cayman Islands

The changes have been formalized through the Virtual Asset (Service Providers) (Amendment) Regulations, 2025, a regulatory update that confirms the role of the Cayman Islands Monetary Authority (CIMA) in supervising the operators in the sector.

Starting from the effective date, every entity offering custody services or cryptocurrency trading platforms, based or operating in the Cayman Islands, will need to obtain a specific license.  

Deadlines for Existing Service Providers

The already active operators will have to submit a license application within 90 days from April 1, 2025, to legally continue their activities.  

In detail:  

– The custodians of cryptocurrencies will have to inform CIMA about the types and quantities of digital assets they intend to hold on behalf of clients and the reasons for the custody.  

– Trading platforms will need to indicate revenue forecasts and the location of the physical hardware used for operations.  

Additional documents required for trading platforms:  

– A cybersecurity strategy to protect users’ funds.  

– A plan for risk management and the prevention of losses and theft.  

– Internal measures for control and safeguarding of digital assets.  

A Hub in the Cayman Islands for the Financial and Crypto Sector

The Cayman Islands, a British overseas territory located in the western Caribbean, are an attractive hub for offshore financial operators, including forex and CFD brokers.  

The country introduced specific crypto regulation in 2020 with the Virtual Asset (Service Providers) Act (VASP Act). This regulatory framework was primarily aimed at combating money laundering (AML) and countering the financing of terrorism (CTF).

According to the data from TheBanks.eu, there are currently 17 virtual asset service providers (VASP) registered and supervised by CIMA. Among these are Blockchain.com, Crypto.com, and B2C2, prominent companies in the retail and institutional sector.

Implications for the Crypto Sector

With the introduction of these new regulations, the government of the Cayman Islands aims to strengthen the regulatory framework and improve the security of the crypto sector.

Stricter supervision could encourage reliable operators and discourage illicit activities, consolidating the archipelago’s reputation as a safe international financial hub compliant with global regulations.