The Cayman Islands Government’s Ministry of Financial Services has announced that it is introducing new regulations for Virtual Asset Service Providers (VASPs). According to a press release, the Ministry of Financial Services said that it has started developing a regulatory framework for VASPs. This framework consists of two phases.
The first phase involves the enforcement and compliance of Anti-money Laundering (AML) and Countering the Financing of Terrorism (CFT). It will determine the way in which the measures of AML and CFT will be enforced and regulated. The regulatory framework’s first phase has already begun starting from the 31st of October. On the 28th of October, a set of rules issued by the Ministry of Finance came into force. The first phase is currently going on.
While on the other hand, in VASPs’ second regulatory framework phase, the ministry will be “licensing requirements and prudential supervision”. Phase two is likely to come into force in the month of June in 2021.
It is now necessary for Virtual Asset Service Providers who plan to work in the Cayman Islands or are already working out there to comply with the Anti-money Laundering and Counter Financing of Terrorism rules. In addition to this, they need to register themselves with the Monetary Authority of the Cayman Islands (CIMA) as well. The Financial Action Task Force (FATF) and the Caribbean Financial Action Task Force (CFATF) are currently assessing the regime of AML and CFT presented by the Cayman.
The Ministry of Financial Services said, “the VASPs legislation allows for the supervision of persons and entities who are involved in providing business services that use or rely on virtual assets on behalf of another person or entity.”
Moreover, it added that this regulatory framework that it is developing for virtual asset providers will be helpful in attracting digital currency businesses as well as persons who deal with cryptocurrencies as a business. The new framework will strengthen this ability of the government, the ministry said.
An amendment bill regarding Virtual Asset Service Providers was also issued recently on October 29. It will be bringing in “provisions to better facilitate the phased commencement approach”.