(CNS): In its latest effort to provide regulatory clarity for funds professionals and investors, the Cayman Islands Government is hoping to steer through three new amendment bills to confirm a framework for tokenised investment fund structures in the Cayman Islands when parliament meets early next month.
The Mutual Funds (Amendment) Bill, 2026, the Private Funds (Amendment) Bill, 2026, and the Virtual Asset (Service Providers) (Amendment) Bill, 2026 are expected to be presented by Premier and Financial Services Minister André Ebanks.
“These legislative enhancements demonstrate the Cayman Islands’ commitment to remaining at the forefront of global financial services innovation while maintaining the strong regulatory standards for which our country is recognised,” Premier Ebanks said in a release unveiling the new pieces of legislation.
“By providing clear statutory frameworks for tokenised funds, we are ensuring that technological advancements can occur within a predictable, transparent and internationally credible regime. This strengthens investor confidence, supports the resilience of our financial services sector, and enhances Cayman’s competitiveness in an evolving global marketplace.”
Tokenisation refers to the digital representation of an investor’s equity or investment interest in a fund using blockchain or similar technology, while the underlying legal ownership and investor rights remain unchanged. Tokenised fund structures offer potential efficiencies in areas such as recordkeeping, transfer controls, settlement processes and investor onboarding.
While tokenised funds have been present in the Cayman Islands for several years, the absence of express statutory provisions has created uncertainty, particularly regarding whether the issuance of digital tokens representing an ownership interest in a fund falls within the scope of the Virtual Asset (Service Providers) Act (VASP Act).
Following consultation with industry stakeholders and the Cayman Islands Monetary Authority (CIMA), the Ministry of Financial Services and Commerce concluded that tokenised funds are most appropriately regulated within Cayman’s existing funds framework.
The amendments ensure that tokenised mutual funds and tokenised private funds remain subject to the Mutual Funds Act and Private Funds Act, preserving strong investor protection and anti-money laundering and countering the financing of terrorism oversight.
Specifically, the mutual funds and private funds bills introduce certain statutory provisions for tokenised funds, including definitions of digital equity tokens and digital investment tokens, enhanced record-keeping obligations, clarifications on transferability, disclosure of technology-specific risks, and express supervisory and inspection powers for CIMA over token transactions and underlying technology.
The VASP Amendment Bill complements these revisions by clarifying that the issuance of digital equity or investment tokens by regulated tokenised funds does not constitute a “virtual asset issuance” under the VASP Act. Tokenised funds that provide virtual asset services to third parties, such as exchange, custody, or transfer services, will remain fully subject to the VASP Act.
The premier noted that regulated investment funds remain a foundational pillar of the Cayman Islands’ financial services industry.
These amendments are designed to enhance the country’s investment funds regime by accommodating technological developments in a proportionately controlled and supervised manner, thereby strengthening resilience and innovation capacity and reinforcing Cayman’s position as a globally recognised financial services centre of excellence and innovation.
