- with readers working within the Securities & Investment industries
The Cayman Islands Government has published legislative amendments establishing a framework for tokenised investment fund structures. The amendments, which were published on 24 March 2026 following their passage in Parliament earlier in the month, introduce clarification across existing funds and virtual asset legislation.
The changes are effected through amendments to the Mutual Funds Act, the Private Funds Act and the Virtual Asset (Service Providers) Act. Together, they address the regulatory treatment of tokenised interests in investment funds within the Cayman Islands.
Background
Tokenised funds have been utilised in the Cayman Islands for several years. However, before these proposed changes such funds were generally required to register as a token issuer under the Virtual Asset (Service Providers) Act and fall within the regulatory scope of that Act.
The amendments provide clarification on this point and confirm the regulatory position for such structures.
Key implications
The legislative amendments are intended to provide regulatory clarity for fund sponsors, managers and service providers. Key implications include:
- Clarification of scope: Digital tokens representing an ownership interest in a Cayman Islands investment fund are addressed within the amended legislative framework, reducing uncertainty as to their regulatory classification.
- Interaction with VASP regime: The amendments clarify the extent to which tokenised fund interests fall within or outside the scope of the Virtual Asset (Service Providers) Act, which is relevant for determining licensing and registration requirements.
- Consistency across fund regimes: Amendments to both the Mutual Funds Act and the Private Funds Act ensure a consistent approach to tokenisation across open-ended and closed-ended fund structures.
- Regulatory certainty for market participants: The framework provides a clearer basis for structuring and operating tokenised funds within existing Cayman Islands regulatory regimes.
Practical considerations
In light of the amendments, fund operators and service providers should consider:
- reviewing existing tokenised structures to confirm alignment with the amended statutory framework
- assessing whether any activities may fall within the Virtual Asset (Service Providers) Act as amended
- updating offering documents and disclosures where necessary to reflect the clarified regulatory position
- ensuring governance and operational arrangements remain consistent with applicable funds legislation
Conclusion
The amendments formalise the regulatory treatment of tokenised fund interests within the Cayman Islands and provide a clearer legislative basis for their use within established fund structures.
Originally published 30 March 2026.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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