Private Funds (Fees) Regulations

Section 1

Law 16 of 2020

SECURITIES INVESTMENT BUSINESS (AMENDMENT) LAW, 2020 (Law 16 of 2020) A LAW TO AMEND THE SECURITIES INVESTMENT BUSINESS LAW (2020 REVISION) TO INCLUDE RELEVANT VIRTUAL ASSET INSTRUMENTS INTO THE REGULATORY FRAMEWORK; TO AMEND CERTAIN DEFINITIONS; AND FOR INCIDENTAL AND CONNECTED PURPOSES ENACTED by the Legislature of the Cayman Islands.

Law, 2020.

(2) This Law shall come into force on such date as may be appointed by Order made by the Cabinet and different dates may be appointed for different provisions of this Law and in relation to different matters.

Revision) - interpretation

the “principal Law”, is amended in section 2 as follows — (a) by renumbering the section as section 2(1);

(b) in subsection (1) as renumbered as follows — (Law 16 of 2020) I Assent, Martyn Roper Governor Date: 25th day of May, 2020

Section 2 Securities Investment Business (Amendment) Law, 2020

Law 16 of 2020

(i) by deleting the definition of “equity interest” and substituting the following definition — “ “equity interest” means a share, trust unit, partnership interest or any other representation of an interest that — (a) carries an entitlement to participate in the profits or gains of the company, unit trust or partnership; and (b) is redeemable or repurchasable at the option of the investor and, in respect of a company incorporated in accordance with the Companies Law (2020 Revision) (including an existing company as defined in that Law), in accordance with but subject to section 37 of the Companies Law (2020 Revision) before the commencement of winding-up or the dissolution of the company, unit trust or partnership, but does not include debt, or alternative financial instruments as prescribed under the Banks and Trust Companies Law (2020 Revision);”;

(ii) by deleting the definition of “listed security” and substituting the following definition — “ “listed security” means any security which is listed on the Exchange or a virtual asset trading platform which is a recognized securities exchange;”;

(iii) by deleting the definition of “recognised securities exchange” and substituting the following definition — “ “recognized securities exchange” means the Exchange or any other securities exchange or virtual asset trading platform licensed under the Virtual Asset (Service Providers) Law, 2020 that the Authority has declared by notice published in the Gazette to be a recognized exchange for the purposes of this Law;”; and (iv) by inserting in the appropriate alphabetical sequence the following definitions — “ “fiat currency” means currency that is issued by the relevant body in a country or by a government that is designated as legal tender in its country of issuance through, among other things, government decree or law; and “virtual asset” means a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes but does not include a digital representation of fiat currencies;”; and

Securities Investment Business (Amendment) Law, 2020 Section 3

Law 16 of 2020

(c) by inserting after subsection (1) as renumbered, the following subsections — “(2) For the purposes of this Law, “virtual asset trading platform” means a centralized or decentralized digital platform — (a) which facilitates the exchange of virtual assets for fiat currency or other virtual assets on behalf of third parties for a fee, commission, spread or other benefit; and (b) which — (i) holds custody of or controls virtual assets on behalf of its clients to facilitate an exchange; or (ii) purchases virtual assets from a seller when transactions or bids and offers are matched in order to sell them to a buyer, and includes its owner or operator, but does not include a platform that only provides a forum where sellers and buyers may post bids and offers and a forum where the parties trade in a separate platform or in a peer-to-peer manner.

(3) For the purposes of the definition of “virtual asset trading platform”, where a single entity or group that controls the platform cannot be identified, the operator of the platform shall be deemed the owner of the entity under which the platform operates.”.

following subsection — “(3) A licensee shall list on the Exchange or a virtual asset trading platform which is licensed under the Virtual Asset (Service Providers) Law, 2020 any virtual assets which are securities under this Law and are being issued, sold or advertised to persons in the Islands.”.

following subsections — “(1B) The Authority may exempt a person from registration or licensing under this Law where — (a) the person is engaged in an activity which requires a licence under the Virtual Asset (Service Providers) Law, 2020 and the Authority determines that the activity would be more capably supervised under the Virtual Asset (Service Providers) Law,

Section 5 Securities Investment Business (Amendment) Law, 2020

Law 16 of 2020

2020 due to the technology and method of delivery, nature and complexity of the activity, or the supervisory needs of the person carrying out the activity; or (b) the Authority determines that additional licensing or registration under this Law is unnecessary as the person is already licensed under the Virtual Asset (Service Providers) Law, 2020.

(1C) Where the Authority exempts a person from registration or licencing in accordance with subsection (1B)(a), it shall require the person to apply for a licence under the Virtual Asset (Service Providers) Law, 2020.”.

(a) in paragraph (a), by deleting the words “alleged dealings; or” and substituting the words “alleged dealings;”;

(b) in paragraph (b), by deleting the words “the Exchange.” and substituting the words “the Exchange; or”; and (c) by inserting after paragraph (b) the following paragraph — “(c) the dealing occurred on a virtual asset trading platform which is a recognized securities exchange.”.

Exchange” the words “or a virtual asset trading platform which is a recognized securities exchange”.

(a) in paragraph 7 by inserting after the words “made on such an exchange”, the words “or in the case of a virtual asset, if it is traded on any virtual asset trading platform”;

(b) in paragraph 11 as follows — (i) in subparagraph (a), by inserting after the words “securities exchange” the words “or virtual asset trading platform”; and (ii) in subparagraph (b), by inserting after the words “a securities exchange” the words “, a virtual asset trading platform”; and

Securities Investment Business (Amendment) Law, 2020 Section 8

Law 16 of 2020

(c) by inserting after paragraph 13 the following paragraph — “

Virtual Assets

at any time in the future that — (a) represent or can be converted into any of the securities listed in paragraphs 1 to 13 of this Schedule; or (b) represent a derivative of any of the securities listed in paragraphs 1 to 13 of this Schedule.”.

subparagraph (2) and substituting the following subparagraph — “(2) Issuing, redeeming or repurchasing securities:

Where a company, partnership or trust issues, redeems or repurchases — (a) any of its securities; or (b) any of its virtual assets which are securities under this Law, falling within paragraphs 1 to 3 of Schedule 1.”.

Passed by the Legislative Assembly the 20th day of May, 2020.

Hon. Barbara Conolly Deputy Speaker Zena Merren-Chin Clerk of the Legislative Assembly