Cayman Islands Introduces Crypto Regulations with New Licensing Rules for Trading and Custody Providers

The Cayman Islands has introduced significant updates to its cryptocurrency regulatory framework, setting a clear path for businesses involved in virtual asset services. As of April 1, 2025, any entity providing virtual asset custody or operating a crypto trading platform within or from this British Overseas Territory will need to secure a license.

This change stems from the Virtual Asset Service Providers Amendment Regulations 2025, recently passed by the country’s lawmakers. The Cayman Islands Monetary Authority (CIMA) will take on the responsibility of overseeing these regulated firms, ensuring compliance with the new standards. For existing virtual asset service providers (VASPs) already active in the region, the clock is ticking, with a 90-day window from the effective date to submit their license applications.

The updated rules aim to bring greater clarity and oversight to the growing crypto sector in the Cayman Islands. Companies offering custody services will need to provide detailed information to CIMA, including the types and amounts of virtual assets they plan to hold for clients, as well as their reasons for managing these cryptocurrencies. Trading platform operators, meanwhile, will be required to disclose their projected revenue and the physical location of their operational hardware.

Beyond these specifics, applicants must also submit broader documentation, such as strategies for cybersecurity, risk management, asset safeguarding, and internal controls designed to prevent loss or theft. This structured approach reflects the territory’s intent to balance innovation with accountability in its financial ecosystem.

A Hub for Crypto and Offshore Finance

Situated in the western Caribbean Sea, the Cayman Islands comprises three islands and has long been recognized as a hub for offshore financial services. Beyond its reputation in forex and contracts for differences (CFDs) brokerage, the territory has steadily attracted cryptocurrency businesses. The foundation for this was laid with the Virtual Asset Service Providers Act of 2020, which required VASPs such as crypto exchanges and wallets to register or obtain licenses with CIMA, primarily to enforce anti-money laundering and counter-terrorist financing measures. The latest amendment builds on that framework, expanding its scope to include specific licensing for custody and trading services.

Data from TheBanks.eu indicates that 17 VASPs are currently registered in the Cayman Islands under CIMA’s supervision. Among them are well-known names in the crypto space, such as Blockchain.com, Crypto.com, and B2C2, serving both retail and institutional clients. This growing presence underscores the territory’s appeal as a jurisdiction that offers a mix of regulatory clarity and business-friendly policies. The new licensing requirements signal a natural evolution of the Cayman Islands’ approach, aiming to refine its oversight while continuing to foster an environment where crypto firms can operate with confidence.

For businesses already established in the region, the next few months will be critical as they prepare their applications to meet the April 1 deadline. New entrants, meanwhile, will need to factor these requirements into their plans from the outset. The Cayman Islands appears poised to maintain its status as a key player in the global financial space, adapting its regulations to keep pace with an industry that shows no signs of slowing down.