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The Cayman Islands is fast becoming the go-to jurisdiction for software developers and fund managers alike as they look to establish cryptocurrency funds and ride what is, if one looks at the price of Bitcoin, a hugely volatile wave.
Funds such as EKT Active Fund, an actively traded cryptocurrency and ICO fund established by Australian hedge fund veteran Damien Hatfield in partnership with Steve Bellotti, former Head of Global Markets for ANZ Bank, have been keeping law firms busy as the demand for crypto-asset strategies builds serious momentum.
“There are various crypto-currency and digital asset strategies being implemented by the
By Lucy Frew, Partner, Walkers – Significant developments in the regimes for data protection and cybersecurity, together with increasing investor awareness, mean that these are key issues for hedge fund businesses in 2018.
Technological advances have brought great opportunities and efficiencies to the alternative investment fund industry but not without also introducing previously unimagined risks, irrespective of geographical location.
With the introduction of new domestic legislation in the form of the Data Protection Law, 2017 (DPL), new international regulation in the form of the General Data Protection Regulation (GDPR) and heightened regulatory scrutiny from the Cayman Islands Monetary Authority (CIMA),
Q&A with Jude Scott, Chief Executive Officer (CEO) of Cayman Finance…
How would you assess the current health of Cayman’s funds industry?
Cayman continues to be a top jurisdiction for formation of Alternative Investment fund products, with the world’s top managers using Cayman Islands vehicles in their structures. All of us will be well aware of Cayman’s strength in hedge funds, with the Cayman Islands being home to over 10,000 registered hedge funds. Cayman’s fund offering also includes a significant number of Alternative Investment funds outside of the traditional hedge fund, including many thousand private equity, venture capital and real
Besides the Data Protection Law, 2017, which was gazetted on 5 June 2017 and is expected to come into force in January 2019, the main regulatory development, in terms of its impact on Cayman regulated hedge funds, is The Monetary Authority (Amendment) Law, 2016.
The law was passed on 24 October 2016 and came into force on 15 December 2017, the same date as The Monetary Authority (Administrative Fines) Regulations, 2017 were published and came into force.
The new rules allow the Cayman Islands Monetary Authority (‘CIMA’) to impose a range of penalties from non-discretionary fines of CI$5,000 for minor breaches
IMS (International Management Services Ltd) is one of the leading providers of directorship services in the Cayman Islands. Its directors bring a wealth of experience to the funds they represent. One area of corporate governance that has become increasingly pertinent relates to the growing threat of cybersecurity.
It is, according to Sean Inggs (pictured), Fund Director at IMS, typical for board meetings to dedicate a portion of time to an investment fund’s cybersecurity processes. Directors should be considering and enquiring after how a fund’s digital and electronic processes are set up and monitored, not just at the fund manager level but
Changes to beneficial ownership – The Companies Law and the Limited Liability Companies Law of the Cayman Islands (Regime) requires certain Cayman Islands corporate entities (each a company) to maintain a beneficial ownership register (Register) at their relevant registered office, the information of which will be stored in encrypted form on a secure, stand-alone search platform established by the Minister of Financial Services of the Cayman Islands, as the competent authority (Competent Authority).
The purpose of the Regime, explains Piers Alexander (pictured), Partner at Conyers Dill & Pearman, is to make beneficial ownership information normally held by corporate service providers,
With the global financial crisis of 2008 now a decade in the past, much has changed in terms of how offshore private funds are governed and monitored. The highly publicised Weavering case in 2009 brought the role of fund directorships into sharp focus, specifically the lack of robust independent oversight.
Both the financial crisis and the Weavering case highlighted significant deficiencies in the way some fund managers approached the role of appointing directors to the board resulting in more independent non-executive board members now being appointed.
The overall quality and scope of directorship services work in the Cayman Islands continues
By Chris Humphries, Stuarts Walker Hersant Humphries – Blockchain technology offers an exciting, unprecedented and innovative opportunity for the Cayman Islands investment funds industry. Whilst cryptocurrencies (such as Bitcoin) have been around for a number of years, we are now seeing a surge of activity in this area. Funds are being established in the Cayman Islands which will focus entirely on blockchain and cryptocurrency strategies. In addition, funds are seeking to innovate by accepting cryptocurrencies as a payment mechanism for subscription proceeds.
We expect smart contracts (discussed below) to become more mainstream in connection with subscriptions into and redemption out
A number of regulatory developments have been introduced into the Cayman Islands over the last 12 months as it takes further steps to ensure the transparency and integrity of its financial funds industry stands up to global scrutiny.
Many of these regulatory changes do not necessarily impact fund managers directly, but more so their service providers, although the Data Protection Law, 2017, which was published in the Cayman Islands Gazette on June 2017, will impact all Cayman entities in respect of how they process and protect personal data.
Data Protection Law, 2017
The Data Protection Law is due to come
