CAYMAN ISLANDS Law and Practice Contributed by: Peter Colegate, Marsha Williamson and Dean Bennett, Appleby
1.2.2 Access to Banking Banking access for virtual asset businesses can be an operational challenge. There is no prohibition on Cayman-licensed banks providing account services to virtual asset businesses, and CIMA has not issued any guidance restricting such relationships. However, businesses often face restrictions imposed by interna- tional correspondent banks on the basis of perceived AML/CFT risk and reputational concern. There are grounds for cautious optimism. The Cayman Islands’ removal from the FATF enhanced monitoring list in October 2023 significantly improved the jurisdic- tion’s international standing and has translated into more constructive conversations with international banking partners. A VASP registration or licence – with VASPs subject to fit and proper assessments, AML/ CFT frameworks and ongoing supervisory oversight – is now a meaningful credential in those conversations. Several institutions, including certain locally licensed banks and a number of international neobanks and payment service providers, have developed a genu- ine appetite for servicing the regulated Cayman VASP market. 1.2.3 ESG/Sustainable Finance ESG obligations for digital asset businesses in the Cayman Islands are, at present, minimal as a matter of Cayman law. There is no mandatory ESG disclo- sure, climate reporting or sustainability-linked con- duct regime applicable specifically to VASPs or digital asset businesses. In April 2023, CIMA indicated that it would monitor international developments and assess the case for ESG-related regulatory requirements, but no consultation has been published and no formal proposals have followed. In practice, ESG considerations arrive through con- tractual channels rather than regulatory mandate. Institutional investors – particularly large limited partners in private funds – increasingly impose ESG requirements, reporting expectations, and exclusion criteria through side letters and limited partnership agreements. 1.2.4 Tax For many clients, the tax position is the starting point and often the decisive factor in choosing the Cay-
man Islands. As a tax-neutral jurisdiction, the analysis is straightforward: there is no corporate income tax, capital gains tax, withholding tax, payroll tax, VAT or stamp duty on digital asset transactions or holdings. This is not a special crypto concession – it reflects the jurisdiction’s general fiscal neutrality, which applies regardless of asset class. A Cayman-incorporated virtual asset business enjoys the same tax position as any other Cayman entity. The more significant and evolving area is international tax reporting. Cayman financial institutions have long been subject to FATCA (in respect of US persons) and CRS (in respect of residents of participating jurisdictions) reporting obligations, and virtual asset businesses that constitute reporting financial institu- tions under those frameworks must comply. However, neither FATCA nor CRS was designed with crypto in mind, and the treatment of wallet-based holdings and exchange accounts has required considered analysis on a case-by-case basis. The Cayman Crypto-Asset Reporting Framework (CARF) Regulations change this landscape materially. The Tax Information Authority (International Tax Com- pliance) (Crypto-Asset Reporting Framework) Regula- tions, 2025, gazetted on 27 November 2025 and in force from 1 January 2026, introduce a purpose-built reporting regime for crypto-asset service providers in the Cayman Islands. The framework is broad in scope: “Cayman Reporting Crypto-Asset Service Providers” are required to conduct due diligence on users, obtain self-certification of tax residency, and report aggre- gate transaction data to the Tax Information Authority for exchange with relevant overseas authorities. 1.2.5 Insolvency The Cayman Islands has no bespoke insolvency or resolution regime for digital asset businesses. The general winding-up framework under the Companies Act (as revised) applies, and the Grand Court has dem- onstrated both the willingness and the competence to adapt that framework to the particular features of crypto-asset insolvencies – including the absence of a physical asset register, the volatility of the insolvent estate’s most valuable assets, and the global and often anonymous character of the creditor body.
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