Are you looking to do a Crypto token launch?
Would you prefer to domicile your venture in a jurisdiction that offers your investors the comfort and certainty of Regulation?
If so, you might want to take a close look at applying for registration in the Caymans Islands as a Virtual Assets Service Provider.
Overview
In the Cayman Islands, the Virtual Assets (Service Provider) Act defines virtual assets as follows -
“a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes but does not include a digital representation of fiat currencies.”
The Cayman Islands VASP Act regulates the following “virtual asset services”.
A “virtual asset service” is defined as - the issuance of virtual assets or the business of providing one or more of the following services or operations for or on behalf of a natural or legal person or legal arrangement —
(a) exchange between virtual assets and fiat currencies;
(b) exchange between one or more other forms of convertible virtual assets;
(c) transfer of virtual assets;
(d) virtual asset custody service; or
(e) participation in, and provision of, financial services related to a virtual asset issuance or the sale of a virtual asset (e.g. market making).
(f) operating a virtual asset trading platform
A company issuing virtual assets (other than private sales) or undertaking any of the above services would need to register with the Cayman Islands Monetary Authority (CIMA) (registered person).
If the company operates a virtual asset trading platform or provides custody services, it would eventually be required to obtain a full license (licensing scheme has not commenced yet, currently in consultation period).
Requirements
The VASP law provides for certain general requirements for registered persons, such as the approval of senior officers, trustees, AML officers by CIMA, approval of transfer of equity interests, periodical AML regulatory audits, preparation of financial statements, and independent annual audits to such statements, among others. It also provides specific requirements for each type of virtual asset service activity.
Documents required for the business are as follows -
- · Business Plan
- · AML/KYC Manual Policies and Procedures
- · Cyber Security Program Policy
- · Customer Private Key Storage Policy (if applicable)
- · Risk Management Policy (if applicable)
- · Internal Safeguards and Data Protection Policy
- · Auditor Consent Letter
Forms to be Completed are as follows -
- · AML/CTF Inherent Risk
- · VASP Registration Application
The company must appoint an AMLCO, MLRO and DMLRO that -
- · holding university degree in relevant area (e.g. law, finance, business, etc)
- · having qualifications such as ACOI, LCOI or ACAMS or equivalent
- · 3 to 5 years of experience in compliance departments, preferably experience in similar businesses or same industry
If you would like to drill down into the details you might want to take a look the AML guidance notes from CIMA which expand on the responsibilities of the officers - https://www.cima.ky/upimages/commonfiles/GuidanceNotesonthePreventionandDetectionofMoneyLaundering,TerroristFinancingandProliferationFinancingintheCaymanIslands-5JUNE2020_1591983049.pdf
The company will also need to appoint an auditor prior to submitting the application.
Further documents and requirements may apply depending on the virtual asset service provided.
Government Fees
There is a non-refundable CIMA fee of KYD$1,000 (approx USD 1,220). If the application is approved, an annual fee to CIMA will apply which ranges from KYD1,000 (approx USD 1,220) to KYD 15,000 (approx USD 18,293) depending on a number of factors. You can find the fees on page 12 https://www.cima.ky/upimages/lawsregulations/VirtualAssetServiceProvidersRegulations,2020_1603983073.PDF (note that the fees are in KYD, not in USD).
Generally, foundation companies whose objects are to participate, promote, develop or otherwise operate for the benefit of a DAO do not generally fall under the VASP Act. It is a matter to assess whether any proposed Caymans Foundation will carry out any virtual asset service, as described above.
Other jurisdictions that you could consider applying for a VASP license (ie that have VASP legislation) would be:
The BVI – Check this link for details: https://offshoreincorporate.com/bvi-virtual-asset-service-providers-vasp-act-reviewed/
Mauritius – Check this link for details: https://offshoreincorporate.com/how-to-launch-an-ito-initial-token-offering-in-mauritius/
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.com
DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.
