Country overview

#43

Cayman Islands

Country stats

Rating Points

200

This indicator describes the overall rating of a given jurisdiction on several parameters according to cryptocurrency operations - market volume, crypto regulation, business climate, taxation framework.

Crypto Penetration

Estimated percentage of crypto users out of the country's total population based on public data.

Legal Entities

118

Number of crypto companies registered in the country based on regulator data if available or other types of public data.

Regulation Points

200

An overall assessment of the granularity of crypto regulation in a given country. A high score is also given to countries where cryptocurrency transactions are highly regulated.

Amount of crypto users

3 900

Total amount of crypto users out of the country's total population based on public data.

Taxation points

This figure, according to our analysts' calculations, indicates the overall level of tax burden for cryptocurrency transactions in a given country. The higher the indicator, the lower the burden.

Market volume points

A rough estimate of this jurisdiction's retail crypto market relative to the rest of the world. The higher the indicator, the higher the market potential.

Status of crypto

Legally allowed

General status of cryptocurrency regulation in this jurisdiction.

Crypto payments

No info

The legal status of cryptocurrency payments for goods and services in a given country based on information from regulators, public data and feedback from our community.

Security Level

Safe place

The overall level of security in a given country based on open data.

Crypto Salaries

No info

The legal status of cryptocurrency salaries to employers in a given country based on information from regulators, public data and feedback from our community.

Business Climate

Very Good

Overall assessment of the friendliness of this country for crypto-business. This indicator takes into account the cost of obtaining a license and the attitude towards crypto entities in the country.

Stablecoin Regulation

Low

This indicator is evaluating the regulation of stablecoins in a given country. Complex regulation means that it is possible to issue steiblcoins and obtain a license for this activity. Basic regulation means that the issuance of stablecoins is possible, but not all legal aspects are defined in the law. Standard regulation means that there is a legal practice of steylcoin circulation in a given country.

Bad Factors

FATF grey list

This section describes the unfavorable economic factors for crypto-business in a given country. These are countries that are under sanctions or on the FATF grey list and other factors.

Types of licenses

Crypto-to-crypto

This license type allows VASP to provide legal exchange from one cryptocurrency to another.

Crypto-to-fiat

This type of license regulates the exchange from cryptocurrency to fiat.

Wallet/Custody

This country has a legal licensing procedure for companies that store cryptocurrency - - crypto wallet providers and custodians.

Cryptofund

This indicator means that investment funds, trusts, and crypto funds can get regulator approval to provide their activity in the country.

Good

Medium

Bad

intro

The Cayman Islands is a unique jurisdiction popular among crypto entrepreneurs. According to PwC’s 4th Annual Global Crypto Hedge Fund Report 2022 (1), 49% of crypto hedge funds were registered here.

Security level

The Cayman Islands are safe places according to Crypto Penetration's security rating. It has 74 out of 100 available points in Numbeo rating (2). Homicide level (3) is 4,5 per 100,000 inhabitants a year.

Crypto Payments

We still need direct confirmation that paying in cryptocurrency on the Cayman Islands is legal. However, according to the case below, crypto payments are possible in this jurisdiction, and they are not illegal. According to Walkers Global interpretation (4) of local legislation, stablecoins may be accepted even by state institutions (English court) as “an alternative form of security for costs”. Please, write us if you have additional information.

Crypto Salaries

We have no direct confirmation that crypto salaries are legal in the Cayman Islands. However, since they are legal in other jurisdictions with English Law, such as the UK and Hong Kong - they are probably legal. Please get in touch with us if you have any information about it.

Legal

According to Harneys’ CI regulation review (5), the following laws regulate digital assets in CY:

the Virtual Assets (Service Providers) Act (VASPA);

the Securities Investment Business Act (SIBA);

the Mutual Funds Act (MFA);

the Private Funds Act (PFA);

the Money Services Act (MSA);

the Bank and Trust Companies Act;

the Proceeds of Crime Act (PCA), the Proliferation Financing (Prohibition) Act, the Anti-Money Laundering Regulations (the AML Regulations) and existing guidance notes, and the Terrorism Act;

the Stock Exchange Companies Act;

the US Foreign Account Tax Compliance Act (FATCA) and the Organisation for Economic Co-operation and Development's Common Reporting Standard (CRS);

the beneficial ownership regime, and

the International Tax Co-operation (Economic Substance) Act (the ES Act).

In 2020, CI activated a new crypto regulation framework for virtual assets, VASPA. The Cayman Islands Monetary Authority (CIMA) (6) is the primary regulator for crypto purchases.

How is VASP defined in the law?

a Cayman entity that provides a virtual asset services as a business, or within the course of a business, in or from within the Cayman Islands and that is registered or licensed in accordance with the VASPA or is an existing licensee that has been granted a waiver.

Also, tokenized funds may be qualified as a VASP. Not tokenized funds investing in virtual assets need another license.

According to Trident Trust (7), CIMA also has another regulatory framework that can be applied to crypto entities- in some cases - fintech licenses.

There are 18 VASPs in the CIMA register (8) and at least 20 private/mutual funds with the word “blockchain”. You may check cases about CY licenses for the following crypto entities in these articles:

Binance (lost its license) (8¹), Sushiswap (trying to get registration)(8²), Nexo (sues regulator)(8³).

Taxation

Tax name	Index
PIT tax Min	0
PIT tax Max	0
Corporate tax (CIT)	0
Min Individual CGT (for crypto)	0
Max Individual CGT (for crypto)	0
Wealth tax Min	0
Wealth tax Max	0

According to Koinly (9), The Cayman Islands is a totally tax-free jurisdiction for crypto entities and individuals with no PIT, CIT, or CGT.

Links

1)PwC’s 4th Annual Global Crypto Hedge Fund Report 2022. PDF-file

2)Crime in the Cayman Islands

3)List of countries by intentional homicide rate

4)Walkers Global interpretation. Article

5) Harney’s CI regulation review. PDF-file

6)Cayman Islands Monetary Authority (CIMA). PDF-file

7)The Virtual Asset Service Providers Regime in the Cayman Islands - March 2023. Article

8)CIMA register

8¹)Binance

8²)Sushiswap

8³)Nexo

9)Crypto Tax-Free Countries 2023. Article

Articles

article

Why did the appeals court side with Tornado Cash?

Short overview of Tornado's story and possible regulation agenda

research

Does The UAE Ban Crypto Payments?

Overview of current legal status of crypto payments in UAE

research

Crypto Entities Overview: UAE

United Arab Emirates is one of the most cryptofriendly jurisdictions in the world. In this research we set up all licensed crypto entities operating in the country

intro

Security level

Crypto Payments

Crypto Salaries

Legal

According to Harneys’ CI regulation review (5), the following laws regulate digital assets in CY:

the Virtual Assets (Service Providers) Act (VASPA);

the Securities Investment Business Act (SIBA);

the Mutual Funds Act (MFA);

the Private Funds Act (PFA);

the Money Services Act (MSA);

the Bank and Trust Companies Act;

the Proceeds of Crime Act (PCA), the Proliferation Financing (Prohibition) Act, the Anti-Money Laundering Regulations (the AML Regulations) and existing guidance notes, and the Terrorism Act;

the Stock Exchange Companies Act;

the US Foreign Account Tax Compliance Act (FATCA) and the Organisation for Economic Co-operation and Development's Common Reporting Standard (CRS);

the beneficial ownership regime, and

the International Tax Co-operation (Economic Substance) Act (the ES Act).

In 2020, CI activated a new crypto regulation framework for virtual assets, VASPA. The Cayman Islands Monetary Authority (CIMA) (6) is the primary regulator for crypto purchases.

How is VASP defined in the law?

Also, tokenized funds may be qualified as a VASP. Not tokenized funds investing in virtual assets need another license.

According to Trident Trust (7), CIMA also has another regulatory framework that can be applied to crypto entities- in some cases - fintech licenses.

Binance (lost its license) (8¹), Sushiswap (trying to get registration)(8²), Nexo (sues regulator)(8³).

Taxation

Tax name	Index
PIT tax Min	0
PIT tax Max	0
Corporate tax (CIT)	0
Min Individual CGT (for crypto)	0
Max Individual CGT (for crypto)	0
Wealth tax Min	0
Wealth tax Max	0

According to Koinly (9), The Cayman Islands is a totally tax-free jurisdiction for crypto entities and individuals with no PIT, CIT, or CGT.

Links

1)PwC’s 4th Annual Global Crypto Hedge Fund Report 2022. PDF-file

2)Crime in the Cayman Islands

3)List of countries by intentional homicide rate

4)Walkers Global interpretation. Article

5) Harney’s CI regulation review. PDF-file

6)Cayman Islands Monetary Authority (CIMA). PDF-file

7)The Virtual Asset Service Providers Regime in the Cayman Islands - March 2023. Article

8)CIMA register

8¹)Binance

8²)Sushiswap

8³)Nexo

9)Crypto Tax-Free Countries 2023. Article