Cayman Islands Updates Crypto Rules: Trading, Custody Providers Must Obtain Licences

The Cayman Islands has updated its crypto regulatory regime, introducing new licensing rules through a legislative amendment. From 1 April 2025, entities offering virtual asset custody and trading platform services in or from the Cayman Islands must obtain a licence.

Mandating a Licence for All

The update in crypto licensing has been clarified through the latest Virtual Asset (Service Providers) (Amendment) Regulations, 2025, which has already received approval from the country's lawmakers. The Cayman Islands Monetary Authority (CIMA) will oversee the regulated crypto firms.

Under the new rules, existing virtual asset service providers (VASPs) already operating in or from the islands must submit their licence applications within 90 days from 1 April 2025.

When applying for a licence, crypto custodians must inform the regulator of “the types and amounts of virtual assets” they propose to hold on behalf of their clients and the reasons for facilitating the safekeeping of these cryptocurrencies, among several other things.

On the other hand, trading platform operators must indicate their expected revenue and the location of the physical hardware for their operations. Along with other standard documents, these platforms must also provide “an outline of strategy and measures in place for cybersecurity, risk management, the safeguarding of virtual assets, and internal controls within the business to prevent loss and theft.”

An Offshore Territory Attracting Crypto Businesses

The Cayman Islands is a British Overseas Territory consisting of three islands in the western Caribbean Sea. It is also home to many forex and contracts for differences (CFDs) brokers running offshore operations from there.

The islands initially implemented the Virtual Asset (Service Providers) Act (VASP Act) in 2020, which requires VASPs to be licensed or registered with CIMA. However, the primary purpose of that legislation was to establish anti-money laundering (AML) and counter-terrorist financing (CTF) measures.

According to TheBanks.eu, there are currently 17 VASPs registered in the Cayman Islands and supervised by CIMA. These companies include major retail and institutional names such as Blockchain.com, Crypto.com, and B2C2.