Supervisory Information Circular: VASP Registration/Notification Requirements (2020-10-30)

Summary

This is a CIMA Supervisory Information Circular dated 30 October 2020 explaining the opening of registration and notification requirements under the Virtual Asset (Service Providers) Law, 2020 (VASP Law).

Who It Applies To

All entities that intend to or currently provide virtual asset services in or from the Cayman Islands, including issuers of virtual assets, virtual asset custodians, virtual asset trading platforms and virtual asset dealers.
Existing CIMA licensees/registrants that also provide virtual asset services.

Phase One Requirements

The circular describes 'phase one' of a two-phase regulatory rollout, focused on AML/CFT compliance. New market entrants and pre-existing virtual asset service providers must register with the Authority. Existing CIMA-regulated licensees/registrants that provide or propose to provide virtual asset services must instead notify (licensees) or register (registrants) using the same VASP Application Form via the REEFS platform. All applicants must also complete an AML/CFT form on REEFS. A full licensing regime and virtual asset issuance approval process will follow in phase two once further provisions of the VASP Law take effect.

Timing, Fees and Penalties

Application window: Opened 31 October 2020, with the Authority encouraging submissions by 12 December 2020 to ensure processing completes before 1 February 2021.
Non-compliance risk: Entities providing virtual asset services on or after 1 February 2021 without being registered or having notified the Authority will be in breach of the VASP Law and may face penalties or enforcement action, including a requirement to cease providing services.
Fees: A KYD 1,000 assessment fee accompanies registration applications, with a further fee payable on approval.

The circular also flags that a forthcoming Statement of Principles and additional AML/CFT guidance will apply to all VASPs, and that further rules and consultation are expected.

Key obligations

New Market Entrants and Pre-Existing Service Providers wishing to provide virtual asset services must register with the Authority using the VASP Application Form on REEFS.
Existing Authority licensees providing or proposing to provide virtual asset services (Other Authorized Entities) must notify the Authority via the VASP Application Form on REEFS; existing Authority registrants in this category must register.
All applicants/notifiers must also complete an AML/CFT form on the REEFS platform.
Entities must be registered or have notified the Authority by 31 January 2021 in order to continue providing virtual asset services; those not registered/notified by that date must cease providing virtual asset services.
Entities not currently providing virtual asset services as of 31 October 2020 must not begin doing so until their registration application is approved or the requisite notification is made.
Registration applications must be accompanied by a KYD 1,000.00 assessment fee paid via REEFS at submission; an additional assessment fee is payable by registrants upon approval.
All entities providing virtual asset services must comply with AML/CFT/CPF and sanctions obligations, including the Anti-Money Laundering Regulations (2020 Revision) and the Authority's Guidance Notes (Amendment) (No. 5): Virtual Asset Service Providers, February 2020.

Applies to

virtual asset service providers, issuers of virtual assets, virtual asset custodians, virtual asset trading platforms, virtual asset dealers, existing Authority licensees providing virtual asset services, existing Authority registrants providing virtual asset services

Deadlines

31 October 2020: VASP Law commences and the VASP Application Form window opens on REEFS.
12 December 2020: Authority-encouraged deadline for submitting VASP applications/notifications to ensure completion before 1 February 2021.
1 February 2021: Entities engaging in virtual asset services on or after this date without being registered or having notified the Authority will be in breach of the VASP Law and subject to penalties/enforcement, including cease and desist.
31 January 2021: Deadline by which entities currently providing virtual asset services must be registered or have notified the Authority in order to continue operating.