Cayman Islands implements licensing rules for crypto firms

The British Overseas Territory Cayman Islands has implemented licensing requirement for crypto custody and trading platforms, effective from April 1.

As of April 1, the updated Virtual Asset (Service Providers) (Amendment) Regulations, 2025 require that all firms providing custody and trading services for digital assets must obtain a license, Cayman Islands Monetary Authority will be overseeing the regulated firms. Existing providers must apply for the license within 90 days, with applications detailing their cybersecurity, risk management, and safeguarding protocols.

In their applications, crypto custodians must also state “the types and amounts of virtual assets” they will hold and reasons for their custody. As for trading platform operators, they must state their expected revenue as well as indicate the location of the hardware that supports their operations. This marks a pivotal change for the crypto firms operation in Cayman Islands, which has historically had open regulatory regime.

The British Overseas Territory initially implemented the VASP Act in 2020, requiring VASPs to be licensed or registered with CIMA. However, the main reason for putting this law in place wasn’t necessarily to regulate the crypto industry itself. Rather, it was primarily designed to prevent money laundering and the financing of terrorism. Now, with the new, aforementioned regulation coming into force on April 1, this extends to crypto service providers.

As of now, there are 17 companies in the Cayman Islands that are registered as VASPs, including big-names like Crypto.com and Blockchain.com.