Statement of Guidance – Virtual Asset Custodians and Virtual Asset Trading Platforms

Summary

This document is a CIMA Statement of Guidance that set out the Cayman Islands Monetary Authority's expectations for how licensed/registered virtual asset custodians and virtual asset trading platforms should conduct their business under the Virtual Asset (Service Providers) Act. It applied to any custodian or trading platform regulated by CIMA under the Act, and framed the Authority's 'minimum expectations' for risk and operational management rather than being fully prescriptive.

• Coverage: The guidance covered governance, conflicts of interest, treating clients fairly, client communications and risk warnings, complaints handling, marketing and promotions, client protection, prudential and risk management standards, IT/cybersecurity, virtual asset custody service requirements, and specific conduct rules for trading platforms (including trade transparency and listing/delisting procedures).
• Governing bodies: Required to have appropriate skills and independence, and to manage conflicts of interest.
• Client treatment: Required clear and fair client disclosures and risk warnings, and effective complaints-handling systems.
• Marketing: Required control of marketing communications.
• Trading platforms: Required to maintain market/trade transparency and formal listing and delisting procedures.

Importantly, this Statement of Guidance is marked as repealed and the extracted text is watermarked 'Repealed' throughout, indicating it has been superseded or withdrawn and no longer represents CIMA's current guidance for these entities. It is retained here for historical reference; readers should consult CIMA's current regulatory measures for virtual asset service providers rather than rely on this document for ongoing compliance obligations.

Key obligations

• Under the (now repealed) guidance, the governing body was to undertake a formal independent third-party review, on an annual basis, of the effectiveness of the custodian's or trading platform's policies and procedures in meeting obligations under the Act.
• Custodians and trading platforms were to maintain a register of potential and existing conflicts of interest along with mitigating measures.
• Custodians and trading platforms were to disclose to clients any conflict of interest or potential conflict of interest.
• Client complaints were to be acknowledged in writing within 7 days of receipt.
• Custodians and trading platforms were to maintain records of complaints received and remediation actions, and provide the governing body with regular complaints-handling reports.
• Clients were to be able to file complaints free of charge.
• Custodians and trading platforms were to maintain a record of marketing communications and promotional campaigns and make them available to CIMA if requested.
• Custodians and trading platforms were to inform clients of the regulated activity performed and the authority responsible for regulating it, and of which specific group entity a client was transacting with.
• Virtual asset trading platforms were to implement controls to reject transactions exceeding internal volume and price thresholds and to ensure trade transparency (bid/offer prices, depth of trading interest, volume and transaction times).
• Virtual asset trading platforms were to develop listing and delisting procedures, consider establishing a listing committee, and make public any decision to accept a listing proposal or delisting request.
• Virtual asset trading platforms were to monitor listed virtual assets on an ongoing basis for continued compliance with regulatory obligations.

Applies to

virtual asset custodians, virtual asset trading platforms

Deadlines

• within 7 days: Custodians and trading platforms were required to acknowledge receipt of client complaints in writing within this period.
• annual basis: The governing body was required to undertake a formal independent third-party review of the effectiveness of policies and procedures on this recurring basis.