Virtual Asset (Service Providers) (Savings and Transitional) Regulations, 2021 (SL 2 of 2021)

Summary

This is a short piece of Cayman Islands subsidiary legislation made under the Virtual Asset (Service Providers) Act, 2020, setting out temporary savings and transitional arrangements for virtual asset service providers (VASPs) as the new licensing/registration regime under the Act came into force. It came into effect immediately after the Virtual Asset (Service Providers) (Amendment) Act, 2020 took effect, and was made by Cabinet on 8 January 2021.

The Regulations allowed two categories of business to keep operating temporarily without having completed the new registration or notification steps required by the Act, giving both groups a window running until 30 January 2021 to continue operating provided they took specific steps so that the Authority could formally register them or receive notice on or before 31 January 2021.

• New VASPs: VASPs who were already carrying on virtual asset service before 31 October 2020 and were not existing licensees, provided they submitted a registration application.
• Existing licensees: Existing licensees who were already carrying on virtual asset service before 31 October 2020, provided they gave notice under section 15.

The Regulations also provide a limited safe harbour from criminal liability under section 35 of the Act: no criminal penalty or administrative fine could be imposed on a VASP that failed to be registered under section 6, or an existing licensee that failed to notify CIMA under section 15, before 31 January 2021. Because all the operative dates in this instrument (30-31 January 2021) are in the past, its transitional provisions are now spent, though it remains part of the historical legislative record for the VASP regime.

Key obligations

• A virtual asset service provider that was operating before 31 October 2020 and is not an existing licensee must submit its application for registration under section 6(1) of the Act promptly to the Authority so that registration can occur on or before 31 January 2021.
• An existing licensee that was operating virtual asset service before 31 October 2020 must provide notice to the Authority in accordance with section 15 of the Act on or before 31 January 2021, or by such earlier date as the Authority may specify.

Applies to

virtual asset service providers, existing licensees

Deadlines

• 30th January, 2021: Last date until which a non-registered VASP or existing licensee could continue carrying on virtual asset service under the transitional arrangement.
• 31st January, 2021 (or such earlier date as specified by the Authority): Deadline for the Authority to register a VASP that submitted a registration application, and deadline for an existing licensee to submit notice under section 15; failure before this date attracts no criminal or administrative penalty under section 35.