CAYMAN ISLANDS Law and Practice Contributed by: Jason Ta, Ben Magahy, Paul Walters and Gemma Walters, Travers Thorp Alberga
10.12Non-Fungible Tokens (NFTs) The VASP Act regulates “virtual asset” which means 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. Generally speaking, an NFT will fall outside this definition although that will depend on the features and characteristics of the NFT itself. As an example, an NFT of a cartoon ape will (generally speaking) not be “virtual asset” although an NFT of a bearer bond or other secu - rity is likely to be regulated not as “virtual asset” but as a security under SIBA. The same analysis applies to NFT platforms – in that a trading platform for cartoon ape NFTs will not be regulated, while a trading platform for NFT-wrapped securities will be regulated. 11. Open Banking 11.1 Regulation of Open Banking There are currently no regulations in the Cayman Islands with respect to open banking. 11.2 Concerns Raised by Open Banking Banks and technology providers are subject to the Data Protection Act – although it does not specifically regulate open banking. Accordingly, banks and technology providers may look to col - laborate to develop and implement best practic - es for data security and privacy in open banking.
(a) holds custody of or controls virtual assets on behalf of its clients to facilitate an exchange; or (b) purchases virtual assets from a seller when transactions or bids and offers are matched in order to sell them to a buyer, and • includes its owner or operator, but does not include a platform that only provides a forum where sellers and buyers may post bids and offers and a forum where the parties trade in a separate platform or in a peer-to-peer man - ner. Having regard to the above, and given the fact that most decentralised exchanges do not hold custody of or control of virtual assets on behalf of clients to facilitate an exchange, it is generally expected that most decentralised exchanges will not be regulated under the VASP Act. 10.10Regulation of Funds Subject to limited exemptions, such funds will either be regulated as a mutual fund under the Mutual Funds Act (for open-ended funds) or as a private fund under the Private Funds Act (for closed ended funds). 10.11Virtual Currencies While virtual currencies are not defined in the VASP Act – the VASP Act does define “virtual asset” as 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. Having regard to the above, a digi - tal representation of a fiat currency (essentially, legal tender) is excluded from the definition of “virtual asset” , however, creating a cryptocur - rency may be “relevant financial business” and an issuer of such an asset is likely to be subject to the AML/CFT regime in the Cayman Islands.
12. Fraud 12.1 Elements of Fraud
In the Cayman Islands, the elements of common law fraud align with those recognised in England
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