ICO in the Cayman Islands – Ong’anya Ombo Advocates

Initial Coin Offering is becoming popular for fundraising of new projects by utilising blockchain technology. Though no specific legislation has been passed on ICO in Cayman, a number of existing legislations are applicable in certain circumstances. They include: -

The Securities Investment Business Law (SIBL) –  primary regulation regarding investments in securities and associated business. Provides that no person shall proceed with securities investment business unless they hold an appropriate license or is exempt from holding a license under the law.

The Money Services Law – regulates money services business. e.g. businesses that provide money transmission and currency exchange services. An entity must be licensed by the Monetary Authority in order to conduct any monetary services. Its applicability is however dependent on specifics of the ICO.

Anti-Money Laundering Laws and Regulations (AML) - the regime comprises of specific rules and regulations that include the proceeds of Crime Law, the AML Regulations and the Guidance notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands.  The regulations apply those to conducting relevant financial business.

The Beneficial Ownership Regime – requires all companies in the Cayman Islands to establish registers of their beneficial owners (those who directly or indirectly hold more than 25% of the interests in the companies)

The Electronic Transactions Law – it is the primary legislation regulating the conclusion of transactions or contracts electronically. Thus, it should be considered in establishing ICO terms and conditions as well as in preparing and accepting the purchase agreement relating to an ICO.

FATCA and the Common Reporting Standards – provides on the automatic exchange of information between jurisdictions regarding combating tax evasion.

Mutual Funds Law – the regulation is of concern where an ICO intends to relate to an investment fund or investment fund activity.

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