Cayman Island trying to become the next crypto friendly nation

[btc_angela]

As they have kick a initial set of regulatory framework that take effect on October 28, Cayman Island wanted to become as friendly as possible to attract potential and set up a base in their country.

In Cayman, a virtual asset is a digital representation of value that can be electronically traded and used for investment purposes. A common type of virtual asset is a cryptocurrency. The VASPs legislation allows for the supervision of persons and entities who are involved in providing business services that use or rely on virtual assets on behalf of another person or entity.

The following were gazetted on Wednesday, 28 October to enact certain provisions of the Virtual Asset (Service Providers) Law, 2020:

Virtual Asset (Service Providers) Law, 2020 (Commencement) Order, 2020;
Virtual Asset (Service Providers) Regulations, 2020;
Monetary Authority (Amendment) (No.2) Law, 2020 (Commencement) Order, 2020;
Securities Investment Business (Amendment) Law, 2020 (Commencement) Order, 2020; and
Mutual Funds (Amendment) (No.2) Law, 2020 (Commencement) Order, 2020
The regulatory framework for VASPs will commence in two phases. Phase one, which begins 31 October, will focus on anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance, supervision and enforcement. Current VASPs and new entrants will need to notify and register with the Cayman Islands Monetary Authority (CIMA). Phase two, which will include licensing requirements and prudential supervision, is expected to come into force in June 2021.

The Virtual Asset (Service Providers) (Amendment) Bill, 2020, which will introduce provisions to better facilitate the phased commencement approach, was published on Thursday, 29 October and will be presented at the next sitting of the Legislative Assembly.

Cayman’s AML/CFT regime, along with our efforts to counter proliferation financing (CPF), is currently being assessed by the Caribbean Financial Action Task Force (CFATF) and the Financial Action Task Force (FATF). The FATF sets the global AML/CFT/CPF standards. The CFATF is the regional body that monitors compliance with the FATF standard. Cayman’s VASPs framework incorporates the FATF’s recommendations for AML/CFT/CPF, which the FATF adopted in 2019.

The AML/CFT focus in phase one provides VASPs with the opportunity to demonstrate their compliance with global standards for AML/CFT/CPF. The launch of phase one will be communicated to the CFATF for its consideration prior to the outcome of Cayman’s CFATF re-rating, which will be reported on at their November plenary. The FATF review of our regime is to be completed shortly thereafter, with Government anticipating the FATF to announce its findings by the end of Q1 2021.

To clarify, the CFATF’s re-rating evaluates the jurisdiction’s progress in addressing the FATF’s technical compliance concerns identified in Cayman’s Mutual Evaluation Report. The FATF review speaks to Cayman’s effectiveness in implementing the FATF recommendations.

https://www.mfs.ky/news/government-commences-framework-for-virtual-asset-service-providers/

What do you think of this one? Will they be successful of attracting every crypto related projects like exchanges or even online gambling and rival other nations?

[Theb]

Cayman Islands is known to be one of the best financial hubs or wealth management hubs out there which is similar to Switzerland which I think we all know that they are also stepping up for the crypto industry so there is no surprise if they would attract people in availing their services in relation to cryptocurrencies because the market is already in there where the rich people can be interested in diversifying their savings in other kinds of investments/assets. When it comes to it being a crypto hub where companies will set up shop there I think it will always depend on things related to taxes, KYC regulations, and other laws which will attract crypto businesses for which we don't know yet on where they stand.

[stompix]

Focusing almost all of their energy on the AML and regulations and FATF recommendations isn't a good start for them. If people want to be friendly with the laws they will choose other countries, they don't come to the Cayman Islands to be model citizens, if they will enforce these laws all they can offer is very lax taxation but unlike the bank sector, they will have a lot of competition in this field.

What I'm curious about is how do they plan to balance regulations with accessibility and keep the paperwork to the minimum. Lithuania and Estonia tried to go the lax way about crypto startups, with minimal requirements, it backfired as worse as possible, and not both of them have raised requirements where is nor possible anymore to pay 400$ a year and run a virtual office and from around half a thousand so-called wallet providers and exchanges the number dropped to half in 3 months.

Oh, one thing, if they really want to become crypto-friendly they would make BTC legal tender! Simple as that, no need for the rest!

[teosanru]

These tax heavens today aren't that lucrative as you think. Most of the countries globally have agreed through the OECD-BEPS agreement to defeat such tax evasion made using these tax heavens. Almost all countries prescribe a much higher withholding tax on any payment made to such countries. If you want to ensure a lower withholding tax at par with normal transactions you have to give all the details about your assets in these countries. This is the primary reason why they are complying with KYC provisions despite becoming a so-called crypto-friendly nation. Most of these nations now have entered into Bilateral treaties with almost all the major countries to ensure the exchange of information and that too through a pretty easy process that needs no involvement of Judiciary. So unless you are deciding to completely move in the Cayman Islands this move won't benefit people living in other countries creating shell companies.

[Lorence.xD]

Cayman Islands is known to be one of the best financial hubs or wealth management hubs out there which is similar to Switzerland which I think we all know that they are also stepping up for the crypto industry so there is no surprise if they would attract people in availing their services in relation to cryptocurrencies because the market is already in there where the rich people can be interested in diversifying their savings in other kinds of investments/assets. When it comes to it being a crypto hub where companies will set up shop there I think it will always depend on things related to taxes, KYC regulations, and other laws which will attract crypto businesses for which we don't know yet on where they stand.

Soon many financial hubs will follow Cayman Islands footsteps, a little push in the scales and other financial/tax havens will do the same thing which will lead to another battle with money laundering that has been fueling this countries for a long time. I do like the idea of adoption but the chances of this tax havens using this cryptocurrency trend as another way for rich people to evade taxes makes the prospect seem not worth it.

[btc_angela]

Oh, one thing, if they really want to become crypto-friendly they would make BTC legal tender! Simple as that, no need for the rest!

I do agree with this, but if you look at Japan or Australia, they haven't had any crypto related projects even though they are bitcoin friendly. And perhaps this is the reason why small countries like Cayman Islands targets to be a crypto financial hubs and not just bitcoin itself.

So let's give them a benefit of the doubt and let the government plans for the next steps, if they lax or need some balance then it's up to them.

[plr]

Oh, one thing, if they really want to become crypto-friendly they would make BTC legal tender! Simple as that, no need for the rest!

I do agree with this, but if you look at Japan or Australia, they haven't had any crypto related projects even though they are bitcoin friendly. And perhaps this is the reason why small countries like Cayman Islands targets to be a crypto financial hubs and not just bitcoin itself.

So let's give them a benefit of the doubt and let the government plans for the next steps, if they lax or need some balance then it's up to them.

Small countries like Cayman island is looking to establish themselves where big players cannot sustain themselves, I hope they can keep it up, if they can win and establish themselves we'll be seeing a lot of small countries doing the same thing, they have nothing to lose compare to big countries who always have issues on regulation.

[figmentofmyass]

Oh, one thing, if they really want to become crypto-friendly they would make BTC legal tender! Simple as that, no need for the rest!

legal tender status just means people/businesses would be required to accept BTC for payment of any debts. this applies to everyone, including those who have no idea how to properly secure their coins. tbh, i don't see that as a good thing, and i don't want bitcoin to have legal tender status.

what we need are lax regulations that minimize the red tape involved in running crypto services/exchanges, p2p trading, etc. with the way the EU and FATF are breathing down everyone's throats, we know crypto regulations are coming. the question is just how bad they'll be.

[stompix]

~

legal tender status just means people/businesses would be required to accept BTC for payment of any debts. this applies to everyone, including those who have no idea how to properly secure their coins. tbh, i don't see that as a good thing, and i don't want bitcoin to have legal tender status.

You can pretty amend the laws as you like, you can recognize it as a means of payment and allowing people to settle it in cryptocurrency and at the same time not make it mandatory. But their focus is not on usage but the money they could gain from a business set up there so rather than aiming at being crypto-friendly their main target is being crypto business-friendly, that's why I mentioned that in the first place.

what we need are lax regulations that minimize the red tape involved in running crypto services/exchanges, p2p trading, etc. with the way the EU and FATF are breathing down everyone's throats, we know crypto regulations are coming. the question is just how bad they'll be.

Cayman having lax regulations would mean zero if the EU decides to cut the banking link between customers in the EU and exchanges based there, so all the lax laws would be useless. Unlike you, I'm not focusing at all on exchanges, if bitcoin indeed becomes mainstream exchanges will be a thing of the past just like those hundreds of stands at the airports that changed francs to marks and to pesetas.

[figmentofmyass]

what we need are lax regulations that minimize the red tape involved in running crypto services/exchanges, p2p trading, etc. with the way the EU and FATF are breathing down everyone's throats, we know crypto regulations are coming. the question is just how bad they'll be.

Cayman having lax regulations would mean zero if the EU decides to cut the banking link between customers in the EU and exchanges based there, so all the lax laws would be useless.

there are lots of VASPs that don't even interface with customer banking, who would be unaffected. you're only thinking about fiat exchanges.

and that's also a big if. if you're suggesting that every country in the world is going to fully comply with FATF or EU or FINCEN regulations to the letter, i think you're mistaken. there are dozens of jurisdictions (several of which are used by the current generation of crypto exchanges to hide behind) that openly disregard FATF rules and have for many years. i dunno why that would all suddenly change now.

the trend of increasing segregation between crypto-only and fiat platforms will continue. that's a given, due to the compliance and security risks of holding custodial bank accounts.

Unlike you, I'm not focusing at all on exchanges, if bitcoin indeed becomes mainstream exchanges will be a thing of the past just like those hundreds of stands at the airports that changed francs to marks and to pesetas.

whether you are focused on exchanges or not, FINCEN and their counterparts are applying the same AML/CFT framework to p2p traders and non-exchange services as they are to centralized exchanges. even bitcoin faucets who were operating from the EU felt the need to shut down after AMLD5.

my point was not about exchanges but rather the extreme barriers to entry being created for all crypto businesses via burdensome regulation.

[Theb]

Cayman Islands is known to be one of the best financial hubs or wealth management hubs out there which is similar to Switzerland which I think we all know that they are also stepping up for the crypto industry so there is no surprise if they would attract people in availing their services in relation to cryptocurrencies because the market is already in there where the rich people can be interested in diversifying their savings in other kinds of investments/assets. When it comes to it being a crypto hub where companies will set up shop there I think it will always depend on things related to taxes, KYC regulations, and other laws which will attract crypto businesses for which we don't know yet on where they stand.

Soon many financial hubs will follow Cayman Islands footsteps, a little push in the scales and other financial/tax havens will do the same thing which will lead to another battle with money laundering that has been fueling this countries for a long time. I do like the idea of adoption but the chances of this tax havens using this cryptocurrency trend as another way for rich people to evade taxes makes the prospect seem not worth it.

I think it is inevitable to do so since if other countries won't do it as well then technically they'll be left behind by the competition who are already implementing it in their businesses, that is why you will see a lot of news about companies having change of hearts about their views in crypto and as well taking advantage of the crypto industry by implementing things related to it. If what Cayman Islands did prove that they have financial gain because of adding cryptocurrencies as one of their financial services then I would expect others to follow.

[stompix]

there are lots of VASPs that don't even interface with customer banking, who would be unaffected. you're only thinking about fiat exchanges.

Because that's what matters, the rest are pure vaporware that will never take off.
What? ICOs? DeFi? Margin trading? Wasn't Bitmex enough to show you that it doesn't matter where you are when you piss off the US it's bad for you?
A company that flees from country to country seeking lax regulation and favorable laws is from the strat on the to avoid list.

i dunno why that would all suddenly change now.

Looming budget deficit and need to repatriate as much money as possible for a start.

my point was not about exchanges but rather the extreme barriers to entry being created for all crypto businesses via burdensome regulation.

For every step with which you make a crypto business easier to operate there are 100x more scams coming up. Estonian and Lithuanian business licenses are proof, that's why as I said, every company taking advantage of those should be on the avoid list! Every company that will seek refuge here from another jurisdiction is one that couldn't comply with the laws while others could do it, using their service is like buying a phone with no international guarantee that you have to ship back to the end of the world to save 10$. I will never be a fan of businesses that are eager to play with people's money but at the same time avoid taking any responsibilities for it, no need for this crap.

[Sergio_CA]

The Cayman Islands was one of the great tax havens that became very well known here in Brazil, because several famous people, politicians, businessmen deposited large amounts there because the money at that time was not taxed, it was not taxed, thus being a great source of profit, because in Brazil taxes are very heavy.
The main focus, in my way of understanding the world, is not about marginalization, the illegality of a given tax haven, because regardless of the use to which it is judged, the problem is the centrality that the financial system possible. Some cryptocurrency projects break with financial centrality, hence the great concern of centralized governments, as it may be an option to circumvent the taxation of high taxes.

[yhiaali3]

The Cayman Islands have lax, low investment laws and tax systems that are independent of British laws. The lax nature of its investment laws has made it a destination for investors as it allows the banks operating in them to deposit money in fake banks without disclosing the sources of these funds and the Cayman Islands provides the lowest tax rate in the world on financial transactions.
I think that this feature in these islands, which provides a lot of privacy for those dealing with banks, as well as the very low tax rate, will greatly encourage the spread of projects based on cryptocurrencies because they have a high degree of privacy preservation, so they will certainly succeed in attracting this type of project. As well as cryptocurrency exchanges that can be based on these islands.

[vaultman]

They do it right, the Cayman Islands are already known for their offshore zone, so now they will also become a friendly zone for cryptocurrencies, while other countries wishing to profit from the taxes of cryptocurrency users, countries with smart governments are taking the right steps towards the assets of the future. I am sure that in the future, many crypto owners will store and exchange cryptocurrency offshore, as most countries tighten the screws for cryptocurrency holders.

[Baofeng]

They do it right, the Cayman Islands are already known for their offshore zone, so now they will also become a friendly zone for cryptocurrencies, while other countries wishing to profit from the taxes of cryptocurrency users, countries with smart governments are taking the right steps towards the assets of the future. I am sure that in the future, many crypto owners will store and exchange cryptocurrency offshore, as most countries tighten the screws for cryptocurrency holders.

But there are still government who thinks otherwise though, while other nation are still in the gray area. And then we have the global regulatory bodies, so it's either countries under that body opted out because there will be pressures for them to accept the framework regarding crypto. So there are negative net effect overall for countries such as Malta or any other countries as well trying to become the next X friendly nation because they will become an outcast.

[Lorence.xD]

~

I think it is inevitable to do so since if other countries won't do it as well then technically they'll be left behind by the competition who are already implementing it in their businesses, that is why you will see a lot of news about companies having change of hearts about their views in crypto and as well taking advantage of the crypto industry by implementing things related to it. If what Cayman Islands did prove that they have financial gain because of adding cryptocurrencies as one of their financial services then I would expect others to follow.

If there is no reform in financial aspects globally, only the 1% will benefit from it, no matter how good the news is, there is always someone who will exploit the system if we let them be. Tax havens also do not employ their people when they are dealing with a shell companies, most employees come from the original country that the shell company's real owner came from. Tax havens are rife with corruption.

[mindrust]

One of the favorite spots for the rich that hide their money away from the governments. You don't need Cayman Islands to hide your money from the government since you can buy crypto anonymously but you need a place to spend it. Hopefully they mean this by "being friendly to crypto". If they are going to ask questions like "what is the source of your funds?" now that wouldn't be very friendly.

[Coin-Keeper]

I am watching these type items closely.  The key is how to convert coins into FIAT (regardless of the currency) cleverly.  Cayman Island, Nevis?  In Nevis you could form a totally anonymous LLC, which could then own the coins.  That corporation could legally sell the coins for EU currency and deposited in the LLC's account.  From there the funds could be transferred wherever and the corporation dissolved in the future.  Also, depending upon where you live, holding coins in such a corporate vehicle may prevent confiscation.  Crazy to even run something like this through your mind really.

[Harlot]

One of the favorite spots for the rich that hide their money away from the governments. You don't need Cayman Islands to hide your money from the government since you can buy crypto anonymously but you need a place to spend it. Hopefully they mean this by "being friendly to crypto". If they are going to ask questions like "what is the source of your funds?" now that wouldn't be very friendly.

People pointed out earlier that there are more than about hiding money since bank secrecy law is something that is inevitable to change or be removed in certain types of scenarios. Cayman Islands like what others have pointed out is a financial hub for the rich who wants these companies found in Cayman Islands to be the one managing there investments and I think them implementing cryptocurrencies as one of their investment products is something that would attract certain investors that have a higher risk tolerance.