In this article, Garry Crossan, our Cayman Island Director, shares his insight on why the Cayman Islands is a globally leading jurisdiction in Fintech.  

The Cayman Islands has created a favourable environment for fintech companies. In the last three years Cayman has raised over $451 million by attracting a 35% increase in tech companies to its shores. Fintech (financial technology) is a digital transformation which streamlines financial service processes and improves systems, examples of common types of fintech activities are digital payments, blockchain, cryptocurrency, insurtech, and P2P lending.

Regarded as the Silicon Valley of the Carribean, the jurisdiction is home to 248 fintech companies, many of which are global companies who are making waves in the global fintech sector. Some of the largest include Polygon, Chainlink, NuProbe and ether.fi, who are innovating with technology to transform smart contracts, revolutionise medical diagnostics and enhance worldwide crypto adoption.  

In 2020, the Cayman Islands passed the Virtual Asset (Service Providers) Act (“VASP Act”) to regulate virtual currencies and introduced a sandbox licence to encourage growth and exploration in digital innovation. Cayman is currently home to 19 Virtual Asset Service Providers and its established fintech sector is driving economic growth and improving infrastructure and consumers’ everyday lives. Strong regulation is one just key characteristic a fintech company looks for, but there are many other essential characteristics that support its growth.  

What sets the Cayman Islands apart from other jurisdictions in the fintech sector? Insight from Garry Crossan

“The Cayman Islands provides Fintech companies with a strong regulatory environment due its robust framework in place, which includes AML procedures to protect its consumers, businesses and its transparent global reputation. Its regulation provides fintech companies with the freedom to digitally innovate, and test innovation with the addition of a sandbox licence, in a supportive and secure landscape.  

We have advanced digital infrastructure, with strong telecommunications, which is ideal for facilitating fast transactions, and a diverse labour market, which has attracted international talent and is growing steadily. They have also created a very business friendly environment by establishing various business-friendly zones to incentivise tech start-ups to the jurisdiction, including the Special Economic Zone & Cayman Enterprise City. These zones support businesses in the jurisdiction with advanced infrastructure, financial advantages, and a diverse ecosystem of support services, including a technology community with which to collaborate.  

The Cayman Enterprise City does require a company to have a physical presence, and has over 300 companies at present, all of which benefit from globally competitive privileges. These include an exemption from import duties, reduced business licensing and work visa fees, residency schemes and access to international business specialists. The jurisdiction also has various associations in place to support fintech companies, including Digital Cayman, Blockchain Association of the Cayman Islands and CodeCayman. All these support different fintech verticals, from building new programmes to software development.  

In addition to all this, Cayman has a compelling fiscal landscape as a tax neutral jurisdiction, with the absence of corporate tax, capital gains tax and income tax. It’s in a strategic location and access to leading financial hubs, 1 hour from Miami and 3 hours from New York, which is ideal for start-ups wishing to expand their network and their operations globally.”

How to set up a Fintech Company in the Cayman Islands?

Starting a new company can be complex, especially when expanding to a new jurisdiction. Implementing AML procedures, applying for a licence (if required) and choosing the most suitable business structure are all critical considerations for a fintech business.  

There are various licences in the Cayman Islands which regulate different fintech activities, including; –  

• The VASP (Virtual Asset Service Provider) Licence which regulates virtual currencies

• The Securities Investment Business Act (SIBA) which regulates securities and investment business

• The Banks and Trusts Companies Act/ Money Services Act which regulates businesses involved in trust services and money services.  

VASP licence Overview

There are certain requirements a fintech company must meet to be eligible for a VASP licence.  The applicant must form a Cayman VASP vehicle prior to registering for a licence. In the first phase, applicants are required to register with the Cayman Islands Monetary Authority under the VASP law prior to the second phase whereby the applicant will apply for the license This can be done via an Application Form provided by the Authority and a registration fee of 1,000 USD is required.  

VASP entities applying for a licence must adhere to the VASP law, in addition to the AML/CFT/CPF measures in place, which involves appointing various natural persons. These include a Money Laundering Reporting Officer, Anti Money Laundering Compliance Officer and Deputy Money Laundering Reporting Officer.  

In the registration form, the Regulator, CIMA (the Cayman Islands Monetary Authority) will assess the business activity, its impact on public interest, compliance measures, forecasted revenue and risk mitigation strategy in place. In addition to this, the applicant is required to submit a detailed business plan containing additional information, including products or services, customer base, delivery channels and details on financials, operations and business structure. The registration approval process takes up to 6-9 weeks, before the licence application process can be initiated which can take up to 9 months to complete.  

Key updates to VASP Act 2025

In April 2025, the VASP Act was updated to include several new key updates. One of these includes a framework to regulate and licence entity’s that provide virtual asset custody services or operate a virtual asset trading platform. Any entities currently registered with the Authority have until 29^th June 2025 to submit an application for a licence.

With the aim to provide clarity for these entities, the amendments to the VASP Regulations includes the requirements that custodians and operators are required to meet to apply for a licence. In addition to these requirements, the framework includes on-going obligations for both virtual asset custodians and virtual asset platforms which they must adhere to.  

Another key update to the VASP Act affects all VASP entities (registered or licenced) whereby at least three Directors are now required, which includes one independent director. There have also been changes to the Authority itself, including the introduction of a Waiver and revisions to the Authority’s powers. The Authority can now grant a Waiver to a supervised person that already conducts regulated business in the Cayman Islands and falls under specific conditions that deems them exempt from VASP registration. The Authority have also been granted additional powers, including examining a VASPs financial position and cybersecurity measures, requesting information if they believe regulations are not being met and revoking a licence if they deem it necessary.  

Sandbox Licence under the VASP licence regime

CIMA may direct a VASP entity to apply for a sandbox licence, or a VASP can choose to apply for sandbox licence, to test their innovation in the jurisdiction for up to 1 year. The licence is useful for VASPs who may require additional oversight and supervision on their innovative technology, or the Regulator may feel it is in the best interest of the public if the technology is temporarily restricted to mitigate risks involved.  

How can we help?

We suggest seeking professional help from local advisors with knowledge on the Cayman Islands regulatory environment to aid you in navigating this process.

As a regulated Corporate Service Provider in the Cayman Islands, we provide clients with dedicated assistance in establishing a fintech company, from the incorporation, compliance and on-going administration. We have assisted multiple fintech businesses with corporate services in our jurisdictions across the globe, from cryptocurrency exchanges to digital banking.

Our team in the Cayman Islands hold an in-depth understanding of the regulatory environment and provide clients with support throughout the entire process, in addition to on-going support to meet regulatory requirements. We can also facilitate introductions to relevant partners, such as banks and lawyers.

The next steps

We offer a consultation call to ensure the jurisdiction suits the business model and long-term goals, outlining the whole process. Speak with Garry for a one-to-one conversation today.

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