CAYMAN ISLANDS Law and Practice Contributed by: Jason Ta, Ben Magahy, Paul Walters and Gemma Walters, Travers Thorp Alberga
3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers It is difficult to determine whether legacy play - ers are implementing solutions introduced by robo-advisers. However, it is not uncommon for crypto funds and high-frequency and algo - rithmic trading funds to be managed by entities that rely on proprietary robo-advice algorithms or licensed software. 3.3 Issues Relating to Best Execution of Customer Trades This is not applicable in the Cayman Islands.
4.2 Underwriting Processes The underwriting process is not currently dic - tated by regulation in the Cayman Islands. To the extent a lender is participating in underwriting under the laws of another jurisdiction, CIMA is likely to require such lender to be in compliance with the laws of such jurisdiction in relation to such underwriting. 4.3 Sources of Funds for Fiat Currency Loans The classic retail banking model of accepting deposits to fund lending is one of a number of different ways to raise funds. As there are no general prohibitions on the method a participant uses to fund its lending in the Cayman Islands, any method of raising capital could theoretically be possible (including through entering into or executing digital asset transactions, structured arrangements or more traditional financing methods). P2P Lending Peer-to-peer lending is not currently regulated in the Cayman Islands. Digital platforms offer - ing decentralised finance operated by Cayman Islands entities are not regulated in the Cayman Islands (assuming that there is no exchange, transfer or custodying of virtual assets on such platforms). Lender-Raised Capital Borrowing through debt is not regulated in the Cayman Islands, although all entities should be aware of and comply with applicable sanctions regimes when receiving funds. Cayman Islands entities are also free to raise funds through issuing investment interests such as through shares (in the case of a company) or member - ship or partnership interests (in the case of a limited liability company or exempted partner - ship), although Cayman Islands entities should
4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities
As a general matter, Cayman Islands law does not specifically regulate lending to individuals or otherwise, so there are no significant differences which vary with the nature of the borrower, save that the provision of lending business would like - ly fall within the scope of the AML Regulations as “relevant financial business” and which will consequently result in AML/CFT obligations on the lender. Such AML Regulations do not apply differently based on the category of the borrow - er. It is also important to note that lending could be considered a financing and leasing business under the economic substance regime of the Cayman Islands unless an exemption applies, and the jurisdiction does have laws regulating deposit-taking business (which could be used by some banking models as a source of funds for loans, see 4.3 Sources of Funds for Fiat Cur- rency Loans for more detail).
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