Cayman Islands upcoming regulation for tokenised funds: Mutual Funds (Amendment) Bill, 2026 and Private Funds (Amendment) Bill, 2026

The Cayman Islands Cabinet has approved the Mutual Funds (Amendment) Bill, 2026 and the Private Funds (Amendment) Bill, 2026, which have now been gazetted for public consultation.

Background on the amendments

The Mutual Funds (Amendment) Bill and the Private Finds (Amendment) Bill (the Bills) follow earlier 2025 proposals, which were the subject of extensive industry engagement and Ogier was closely involved throughout the consultation process. The Ministry of Financial Services and Commerce has responded to industry concerns in respect of the 2025 proposals by confirming that:

• tokenised mutual funds and tokenised private funds will be regulated in the same manner as traditional funds; tokenisation does not alter the underlying regulatory classification of a fund
• a digital equity token or digital investment token is a digital representation of the whole of an equity interest in a tokenised mutual fund or the whole of an investment interest in a tokenised private fund and the underlying legal interest (for instance shares or limited partnership interests) remains the source of rights and obligations
• the issuance of a digital equity token by a tokenised mutual fund, or a digital investment token by a tokenised private fund is excluded from the definition of issuance of virtual assets under the Virtual Asset (Service Providers) (Amendment) Bill, 2026 (discussed further below)

The Ministry has noted that the Bills are intended to support innovation and competitiveness while maintaining a robust and proportionate regulatory framework for the Cayman Islands’ financial services sector.

New definitions: "tokenised mutual fund" and "tokenised private fund"

The core objective of the Bills is to establish clear and specific statutory requirements for "tokenised mutual funds" and "tokenised private funds".

Under the Mutual Funds (Amendment) Bill, 2026, a "tokenised mutual fund" is a mutual fund that has any of its equity interests represented by digital equity tokens, i.e. digital representations of the whole of an equity interest. Similarly, under the Private Funds (Amendment) Bill, 2026, a "tokenised private fund" is a private fund that has any of its investment interests represented by digital investment tokens, i.e. digital representations of the whole of an investment interest.

Additional obligations to be imposed on tokenised funds

Key requirements for both regimes include:

Robust record-keeping and annual compliance confirmation

All records relating to the issuance, creation, sale, transfer and ownership of digital tokens representing fund interests must be properly kept, securely maintained and available for inspection by the Cayman Islands Monetary Authority (CIMA). For tokenised mutual funds, the CIMA licensed mutual fund administrator must be satisfied that record-keeping and compliance for the fund’s digital equity tokens meets the required standards. For tokenised private funds, these obligations will be placed directly on the fund itself.

Additionally, a tokenised fund must provide CIMA with an annual confirmation that such records have been properly kept and maintained in accordance with the Mutual Funds Act or the Private Funds Act as applicable.

Transfer restrictions

Digital tokens representing fund interests may only be transferred with operator approval, in accordance with the fund's offering and constitutional documents. In this context, “operator” refers to the person responsible for the governance and oversight of the fund, specifically:

• the directors, where the fund is incorporated as a company
• the general partner, where the fund is structured as a partnership, or
• the trustee, where the fund is constituted as a unit trust

Enhanced disclosure

The fund's offering documents must disclose risks specific to digital tokens such as cybersecurity, transferability of the digital tokens, and any potential risks identified by CIMA, together with the fund’s approach to mitigating those risks.

CIMA oversight

CIMA may impose specific restrictions on the characteristics of digital tokens. We expect such restrictions to take a similar form as those conditions that CIMA currently imposes on mutual funds that seek to implement tokenisation. For more information, read our article: Tokenisation of Cayman Islands mutual funds

In addition to these anticipated restrictions, CIMA is expressly empowered under the Bills to take a more active supervisory role in relation to tokenised funds. CIMA may request any additional information it considers necessary to assess an application relating to a tokenised fund, and it will also monitor the fund’s ongoing compliance with statutory requirements. To ensure proper investor protection and adherence to the regulatory framework, CIMA’s supervisory powers extend to conducting inspections of both the underlying technology supporting tokenisation and the digital token transactions themselves.

Virtual Asset (Service Providers) (Amendment) Bill, 2026

Alongside the Bills, the Virtual Asset (Service Providers) (Amendment) Bill, 2026 has also been gazetted, which will clarify that issuance of digital equity tokens and digital investment tokens by tokenised mutual funds and tokenised private funds respectively are excluded from the Virtual Asset Service Provider (VASP) regime. This provides further certainty and delineates the funds regime from separate virtual asset regulation in the jurisdiction.

How Ogier can help

Ogier provides integrated fund formation and regulatory support to clients seeking to launch tokenised funds in the Cayman Islands. Ogier Global holds a mutual fund administrator licence and, subject to appropriate client due diligence and risk assessment, is able to act as principal office for tokenised Cayman Islands mutual funds.

We have a track record of assisting clients in the launch and ongoing compliance of tokenised funds, drawing on the expertise of our dedicated Technology and Web3 team, together with fund and regulatory specialists across multiple jurisdictions. Our experience spans structuring tokenised fund vehicles, addressing governance, risk management, and navigating the regulatory requirements imposed by CIMA.

For more information, contact your usual Ogier attorney.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice