The Cayman Islands wants a makeover: the government has put in place a regulatory framework for cryptoservice providers, an action that aligns with the country's efforts to improve its image in the eyes of the European Union and the United States.
A regulatory framework in a heavenly setting
The Cayman Islands Ministry of Financial Services has announced a regulatory framework for cryptoservice providers. The framework incorporates the updated 2019 recommendations of the Financial Action Task Force (FATF).
These recommendations include the "travel rule" which requires cryptoservice providers to collect and share personal data about the originator and recipient of a transaction.
The Ministry states in its October 31, 2020 press release that this framework strengthens the country's ability to regulate and attract investors in the cryptomatics sector. The promulgated rules came into force on October 28, 2020.
The implementation of this regulatory framework will be done in 2 stages. The first phase - which is ongoing - focuses on compliance and enforcement of the AML/CFT rules.
Existing cryptoservice providers and new entrants will be required to register with the Cayman Islands Monetary Authority to demonstrate compliance with MLA/CFT standards.
The second phase beginning in 2021 will address licensing and prudential requirements.
Whitewashed by the European Union
The Cayman Islands were among the countries concerned by the class actions launched by a specialized firm operating in New York and targeting major exchanges and cryptosocieties and their key executives.
The European Union has just withdrawn the country from the black list of tax havens in October 2020.
Does such a regulatory framework, which infringes on the privacy of customers of cryptos service providers, really make the country more attractive to the latter? It's all a matter of currency these days: financial data is sold to the government in the name of the fight against money laundering and terrorist financing. Of course, the states have to fill their coffers and increase the tax burden - in every sense of the word - by all means. Cryptophyles, the private city is over! Even the Caymans are bowing down to the big raptors - we'll avoid naming names.
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