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Cayman Islands’ legislative assembly introduced new legislation capable of regulating local companies carrying out activities related to cryptocurrencies. The main purpose of the proposed rules is towards monitoring the operations of digital asset exchanges.
On April 28, the Virtual Asset Service Provider (VASP) Bill was submitted for review and its aim is offer a regulatory framework. The framework deals with registration guidelines and requirements for companies that offer services related to cryptocurrency.
The proposed regulations are based on FATF guidelines such that the service providers in the country can compete globally. If approved, it will be applicable to cryptocurrency exchanges, cryptocurrency asset custodians, and those who operate decentralized exchanges.
The VASP Bill is among the five bills proposed towards the reformation of the country’s financial services sector. Many nations have been able to implement new cryptocurrency regulations based on the FATF guidelines.
The VASP bill would bring the cryptocurrency industry under the Cayman Islands Monetary Authority. According to the bill, any firm interested in providing virtual asset services must register with the authority and renew its registration before January 15 each year.
Some of the factors to be considered by the Monetary Authority include the number of skilled people working for the cryptocurrency firm, adequate cybersecurity measures, sufficient capital, as well as robust accounting systems. Besides, such companies must likewise have a registered office in the country prior to obtaining a license for operation.
The bill states that such firms must prove that their services bring improvement to financial services in the country and are in line with international standards. Nevertheless, the requirements are not applicable to firms in the sandbox, for them to develop their services freely.
Any firm’s license can be revoked if it fails to comply with set guidelines; the authority can take such firm to court and order a VASP to substitute any senior officer.