CIMA issues temporary measures and registration questionnaire for tokenised funds

The Cayman Islands Monetary Authority has now circulated temporary measures for tokenised mutual funds and tokenised private funds pending finalisation of its new rule for tokenised investment funds.

These temporary measures comprise a preliminary questionnaire and a limited set of revised conditions which, according to the Cayman Islands Monetary Authority (CIMA), will form the basis for approval of registration applications for tokenised funds until the new rule is finalised. 

Summary of revised temporary conditions for tokenised funds

The revised conditions circulated by CIMA are more limited and focused than some of the broader conditions previously seen in practice. In summary, they require the following:

Secure and auditable token records

All records relating to token issuance and token transfers must be securely maintained by the fund and be auditable on the blockchain or through a secure digital ledger.

Prompt operator notification to CIMA

The operators of the fund must advise CIMA promptly if the fund becomes aware that issued tokens have become impaired (for example, due to disruptions or failures of the supporting blockchain infrastructure), if it is unable to redeem tokens within a reasonable period or if any other matter of concern regarding the fund is observed.

Annual confirmation letter

Within six months after the end of each financial year, the fund must submit an annual confirmation letter to CIMA, setting out a summary of token issuance and redemption during the year, together with a statement of compliance with applicable custody, cybersecurity and risk management measures and any other submission required by CIMA. This information must be confirmed by the fund's CIMA-approved auditor or another auditor specialising in tokenised investments or funds.

The summary must include:

• tokens outstanding at the beginning of the year
• new tokens issued
• existing tokens redeemed
• tokens outstanding at year end, and
• tokens transferred during the year 

Operator expertise

At least one of the operators of the fund must have the requisite knowledge and expertise in tokenised products.

CIMA registration questionnaire for tokenised funds

CIMA is also requiring tokenised fund applicants to complete a preliminary questionnaire pursuant to section 22I of the Mutual Funds Act and focuses on a relatively specific set of disclosure and operational questions, including:

• confirmation that the fund is a tokenised mutual fund
• whether the digital equity tokens will be offered to the public or only to qualified or sophisticated investors, and whether they will be listed or admitted to trading
• restrictions on transferability, including operator approval and controls for permitted secondary transfers, and the mechanism for transfer and redemption
• the blockchain used for issuance, whether smart contracts are used, and who is responsible for deploying and maintaining them 
• who holds or controls investors' private keys or access credentials, and the relevant safekeeping arrangements
• digital equity token-specific risk disclosure, including cybersecurity and transferability risks, and how those risks are addressed or mitigated for investors
• arrangements for maintaining records of issuance, creation, sale, transfer and ownership of digital equity tokens, including the responsible service providers
• AML / KYC procedures applicable to digital equity token holders, including wallet screening and whitelisting where relevant

Legislative developments

These developments should also be read alongside the broader legislative changes introduced in 2026 for tokenised funds (Cayman Islands welcomes new regulation for tokenised funds). While CIMA has indicated that a new rule supporting the regulatory framework for tokenised investment funds is expected shortly, CIMA has made clear that, in the interim, the preliminary questionnaire and revised conditions will be used as the basis for approval of tokenised fund registration applications.

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.

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