Business

What steps must you take to receive a Cayman Islands permit?

Published

6 months ago

October 21, 2023

sweety

Thanks to its favorable taxation, simple firm registration process, and lack of exchange controls, the Cayman Islands is an attractive jurisdiction for the crypto business. In addition, this state takes privacy and security seriously, which is an essential factor for the financial sector. Receiving a Cayman Islands crypto license takes only a few months, but after that, firms can work legally, make a profit, and save on taxes.

Who exercises control, and what types of permits?

Government authorities have introduced legislation for crypto activities since 2020: VASP. Based on this legislation, regulation of organizations and preliminary control of licensing takes place. VASP is aimed at global rules, considering the protection of customer rights and the introduction of AML (countering illegal financial transfers) into regulation.

CIMA is the regulatory body responsible for issuing permits for various financial institutions related to digital assets. The Regulator issued the following 4 types of permits:

for the exchange of e-money;
for storing digital currency and making transfers of client funds;
brokerage activities – the firm acts as an intermediary;
for investing in crypto funds.

Thus, before applying for licensing, the firm needs to decide on the direction of its activities.

Critical Benefits of the Jurisdiction

Receiving permission to operate virtual assets in a given jurisdiction has several advantages:

loyal and transparent control;
stable economic and financial policies;
developed infrastructure;
providing access to banks associated with virtual assets;
there is no special tax legislation related to virtual assets;
lax registration requirements.

This range of benefits attracts many entrepreneurs to open a business in this state.

Requirements for receiving a permit

For successful permitting, a firm must fulfill several regulatory requirements. First, you need to register an organization within the state borders and have a physical office there. The authorized capital must be at least 100,000 USD. From the management team, it is necessary to appoint a person responsible for compliance with the requirements of the Regulator.

To receive a permit, it is necessary to draw up a detailed business project and develop AML and KYC programs for implementation in the company’s activities. There is also an annual licensing fee of 4,000 USD. When all papers are provided (passports of directors and shareholders, registration, police clearance certificates, confirmation of a legal source of income, etc.) and the conditions are met, the regulatory body will conduct a thorough check for compliance with the required standards.

The licensing process lasts three to six months, depending on the chosen type of activity of the organization.

What is the process of receiving a permit?

To get the desired papers, you need to complete several very important steps.

Collect papers (up to 2 weeks)

Having come up with a unique company name, people have to provide various papers: copies of ID cards of the management team, a resume, a detailed business plan, a place of registration or paid utility bills, and paper on the origin of capital.

Firm registration (2 weeks)

At this stage, you provide the constituent documents to register the firm and enter them into the Registry. It is also necessary to prepare an accounting system.

Permitting (3 months)

It is necessary to select the type of crypto activity from the presented list and indicate it in the application submitted to the Regulator (CIMA). Close contact must be maintained at this stage to resolve any discrepancies.

Open a bank account (less than 1 month)

This stage can be combined with the licensing process. You need to choose one of the local banks whose conditions will best meet the company’s requirements. It is necessary to familiarize yourself with what measures are taken in the banking system to comply with AML. An authorized representative of the bank must provide the required documents, including a certificate of the source of capital and a list of potential partners, in the application to the bank, indicate the purpose of opening an account, and provide documents confirming registration.

Therefore, after approximately 5 months, if all requirements are met, the firm will be issued a permit for crypto activities.

Conclusion

There are a huge number of jurisdictions that create conditions for the development of crypto business, but in return, they ask you to pay high taxes and require you to meet complex requirements. As a result, many people prefer offshore jurisdictions. Seychelles is the best solution for both large companies and small start-ups.