The Cayman Islands Monetary Authority (“CIMA“) has introduced a new Rule and Statement of Guidance on Market Conduct for Virtual Asset Service Providers (“VASPs“), alongside updated versions of the CIMA Rule – Virtual Asset Custodians and Virtual Asset Trading Platforms and the CIMA Statement of Guidance – Virtual Asset Custodians and Virtual Asset Trading Platforms (“VATPs“), originally published in December 2024. This post highlights what’s new and what has changed.
The brand-new Market Conduct Rule and Statement of Guidance (“RSOG“) applies to all VASPs authorised under the Virtual Asset (Service Providers) Act (As Revised). It establishes comprehensive requirements on integrity and conflicts of interest, client asset safeguards, marketing and promotions, client onboarding and agreements, complaints handling, public disclosures, cross-border transactions, proprietary trading, and additional obligations for VATPS in relation to unfair trading activities and market abuse, and for custodians in relation to segregation and safekeeping of client assets. Of particular note are detailed insurance requirements covering professional liability, theft or loss of client assets, business interruption, and cybersecurity, with provision for alternative risk mitigation measures where insurance is unavailable.
The February 2026 updates to the CIMA Rule – Virtual Asset Custodians and Virtual Asset Trading Platforms and the CIMA Statement of Guidance – Virtual Asset Custodians and Virtual Asset Trading Platforms involve the repeal and relocation of several provisions now addressed by the new Market Conduct RSOG. Repealed provisions include certain rules on conflicts of interest, treating clients fairly, certain marketing communications requirements, risk warnings, complaints handling, insurance, due skill and care, and client protection. These matters, along with requirements in relation to client agreements, are now governed comprehensively by the Market Conduct RSOG, reducing duplication and streamlining obligations.
Custodians remain required to clearly identify and segregate client assets from proprietary assets, hold virtual assets in identifiable segregated wallets, and deposit fiat funds with licensed banks. Robust private key management, including backup procedures and key compromise protocols tested annually, and independent third-party security audits continue to be essential. Prudential rules on regulatory capital, recovery plans, and stress testing remain unchanged.
VATPs remain obligated to implement systems to monitor and detect market abuse, insider dealing, and manipulation, reporting suspicious activity to CIMA immediately. Requirements around transparent pricing policies, listing and delisting rules, and controls to reject orders exceeding predetermined thresholds continue to apply.
Compliance teams should carefully review the new Market Conduct RSOG, which introduces detailed requirements previously scattered across multiple instruments. Those already compliant with the December 2024 rules should map the repealed provisions to their corresponding sections in the new Market Conduct RSOG to ensure ongoing compliance.
The Maples Group has extensive experience in advising VASPs on their various regulatory compliance obligations. Please reach out to your usual Maples’ contact if we can be of assistance.
