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

Summary

This is a CIMA Rule setting out requirements that apply to virtual asset service providers (VASPs) when they voluntarily cancel their licence, registration, or waiver under the Virtual Asset (Service Providers) Act (VASPA). It expressly does not cover involuntary cancellations (e.g., resulting from regulatory breaches or enforcement action), which are handled separately under CIMA's enforcement powers.

Scope of Coverage

• VASPs that permanently cease virtual asset services
• VASPs winding down operations
• VASPs that never actually started business after being licensed, registered, or granted a waiver
• VASPs discontinuing or relocating business out of the Cayman Islands
• VASPs voluntarily seeking cancellation

Notification and Ongoing Obligations

• Notification of cessation: VASPs must notify CIMA in writing of decisions to cease operations, within specified short timeframes.
• Notification of anticipated failure to commence business: VASPs must notify CIMA in writing of anticipated failure to commence business within a year of authorization, within specified short timeframes.
• Notification of material changes: VASPs must notify CIMA in writing of material changes during the cancellation process, within specified short timeframes.
• Cooperation: VASPs have an ongoing obligation to cooperate with CIMA.
• Protection of client data and assets: VASPs must protect client data and assets.
• Stakeholder notification: VASPs must inform stakeholders of the cancellation.
• Compliance with conditions: VASPs must comply with any conditions CIMA imposes during the process.

The Rule should be read together with a companion Regulatory Procedure document on the same topic, which sets out documentation and procedural steps. Breach of the Rule can lead to penalties under section 34 of the Monetary Authority Act and other enforcement action under CIMA's enforcement manual and the VASPA. The Rule takes effect on the date it is published in the Cayman Islands Gazette; the source document does not state that publication date.

Key obligations

• A VASP intending to cease its virtual asset service operations must notify CIMA in writing within 15 days of the date the decision to cease is made.
• A VASP that has not commenced virtual asset service business within one year of being granted its licence, registration, or waiver must notify CIMA in writing at least 15 days before expiry of that one-year period if it anticipates not commencing business in time, stating whether it intends not to commence business at all.
• A VASP must comply with VASPA and other applicable Acts and provide CIMA any information reasonably required to evaluate compliance during cessation, following the documentation/procedural steps in the companion Regulatory Procedure.
• A VASP must ensure all stakeholders (clients, investors, other concerned third parties) are accurately informed of the cancellation in accordance with the Regulatory Procedure.
• A VASP must take all necessary steps to protect and secure clients' data and clients' assets (including virtual assets) during the cancellation process.
• A VASP must comply with any conditions or restrictions CIMA imposes to safeguard client interests and ensure compliance with relevant Acts.
• A VASP must notify CIMA of any material changes that may impact its regulatory good standing during the cancellation process within 15 days of becoming aware of the change.

Applies to

Virtual Asset Service Providers (VASPs)

Deadlines

• within 15 days of the date the decision to cease operations is made: VASP must notify CIMA in writing of its decision to cease virtual asset service operations.
• at least 15 days prior to expiration of the one-year period from grant of licence/registration/waiver: VASP that has not commenced business must notify CIMA if it anticipates it will not commence business within the one-year period.
• within 15 days of becoming aware of the material change: VASP must notify CIMA of material changes affecting its regulatory good standing during the cancellation process.
• date of publication in the Cayman Islands Gazette: Effective date of this Rule.