CAYMAN ISLANDS Law and Practice Contributed by: Jason Ta, Ben Magahy, Paul Walters and Gemma Walters, Travers Thorp Alberga
6.4 Listing Standards In relation to virtual asset trading platforms, the authority has the ability under the VASP Act to impose listing standards for virtual assets and has issued proposed listing rules in the context of a proposed conduct of business Rule (not yet finalised). Further, the VASP Act provides that a virtual asset trading platform is to assure itself that a virtual asset to be traded on the platform is not fraudulent or deceitful and is required to carry out reasonable due diligence on such vir - In the context of a virtual asset trading platform, there are no detailed order handling rules. What governs are general requirements concerning fair treatment of clients (including disclosure rules). In the case that a virtual asset service provider is a licensee under SIBA, it will be subject to various additional rules under SIBA and the Statement of Guidance relating to Client Under - standing, Suitability, Dealing and Disclosure for Securities Investment Business. The Securi - ties Investment Business Regulations establish guidelines for interactions with clients, necessi - tating that client agreements encompass specif - ic details, such as transaction execution meth - ods, and mandating the issuance of a contract note to the client under certain post-transaction scenarios. The Statement of Guidance comple - ments the Regulations by providing additional directives for client interactions, safeguarding client order priority, prohibiting actions that may disadvantage client transactions, and enforcing fair and prompt allocation, along with timely and optimal execution. tual assets and their issuers. 6.5 Order Handling Rules
6.6 Rise of Peer-to-Peer Trading Platforms
Generally speaking, the VASP Act excludes platforms that merely connect buyers and sell - ers and do not hold custody of or control virtual assets. Nonetheless, peer-to-peer trading plat - forms can impact traditional market participants in various ways, such as through: • reduced market share – increased access and ease of peer-to-peer trading could attract users away from traditional financial institu - tions and exchanges; • new opportunities – traditional players could adapt by integrating peer-to-peer functionali - ties into their offerings or collaborating with such platforms; and • forced innovation – traditional players need to adapt and offer similar features or partner with P2P platforms to remain competitive. In addition, peer-to-peer trading platforms can impact fintech participants in various ways, such as through: • increased competition – peer-to-peer plat - forms could compete directly with existing fintech solutions for trading and financial services; and • collaboration opportunities – fintech players could integrate with peer-to-peer platforms or offer complementary services, like asset management or education. Regulatory challenges can include: • AML/CTF compliance – ensuring peer-to-peer platforms comply (to the extent applicable) with AML/CTF regulations is difficult due to the decentralised nature of transactions;
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