Regulatory Procedure - Cancellation of Licences, Registrations, or Waivers for Virtual Asset Service Providers

Summary

This is a CIMA Regulatory Procedure (effective September 2025) that sets out the practical steps and documentation Virtual Asset Service Providers (VASPs) must follow when voluntarily cancelling a licence, registration, or waiver issued under the Virtual Asset (Service Providers) Act. It should be read alongside the related CIMA Rule on the same topic and the VASPA itself.

Scope of the Procedure

• Applies to: Voluntary cancellations only, including permanent cessation of virtual asset services, winding down or relocating operations, never having commenced licensed activity, or no longer meeting the statutory definition of a VASP.
• Excludes: Involuntary cancellations arising from enforcement action, which are handled under CIMA's separate Enforcement Manual.

CIMA will only approve a cancellation once it is satisfied the VASP is in 'good standing' (up to date on filings, fees, and remediation of supervisory findings) and has met AML/CFT and sanctions compliance requirements.

Core Documentation Package

• A formal letter of intent.
• Return of the licence/registration/waiver document.
• Payment of any prescribed fee.
• A board resolution approving cessation.
• A final audit report (or alternative agreed-upon procedures).
• Evidence of client asset reconciliation and liability resolution.

Beyond this core package, the procedure details additional documentation required depending on the specific reason for cancellation (e.g., ceasing business entirely, never having commenced business, no longer meeting the VASP definition, or lapse due to non-payment of renewal fees). It also notes CIMA may publish a public notice of cancellation in the Cayman Islands Gazette. Overall, this is a procedural/administrative guidance document rather than a source of new substantive obligations beyond documentation and process requirements for exiting VASPs.

Key obligations

• A VASP seeking voluntary cancellation must submit a formal letter of intent stating its intention to cancel, the effective date of cessation, rationale, confirmation that all statutory/regulatory/financial obligations have been met, and a contact person.
• The VASP must return the original licence, registration, or waiver document to CIMA, or provide a notarised affidavit if it is lost.
• The VASP must pay in full any prescribed fee associated with the voluntary surrender of its licence, registration, or waiver.
• The VASP must provide a certified copy of the board (or equivalent governing body) resolution approving cessation of business and stating the effective date.
• The VASP must submit a final audit report (or, where an auditor was not engaged, agreed-upon procedures conducted by an independent third party) covering the period from the last audited financial statements to the final day of operations.
• The VASP's Compliance Officer (or equivalent) must provide notarised or certified confirmation that all AML/CFT systems and procedures are finalised and no suspicious transactions remain under review.
• The VASP's Compliance Officer (or equivalent) must provide notarised or certified confirmation of sanctions compliance, including completed transaction screening and resolution of any potential matches.
• The VASP must demonstrate that all stakeholders were notified of the cancellation in advance of cessation, with supporting documentation such as client notifications and confirmation of no outstanding obligations to clients.
• The VASP must provide evidence of reconciliation of client assets and resolution of financial liabilities, including account closure summaries, outstanding liability details, and confirmation of no pending legal or financial claims.
• If the VASP holds other licences/registrations under different regulatory Acts that are also ceasing, it must initiate cancellation procedures under each applicable Act.
• Where cancellation is due to cessation of business, the VASP must submit a cessation plan addressing rationale, fulfilment of statutory/AML obligations, stakeholder notification, distribution/transfer of client assets, absence of outstanding claims, and the entity's post-cessation status.
• Where the VASP never commenced business, it must submit a notarised affidavit (signed by at least two directors or an acceptable party) confirming no transactions were conducted and any client funds collected were returned in full.
• Where an entity no longer meets the VASP definition, it must submit a notarised affidavit explaining the rationale and confirming the cessation date, plus a statement confirming client assets were managed in compliance with AML/CFT standards.
• Where a licence or registration lapses due to non-payment of renewal fees, the VASP must provide a statement explaining the causes of non-payment.

Applies to

Virtual Asset Service Providers (VASPs)