Cayman Islands Enacts Tokenised Funds Laws Effective March 24, 2026

The Cayman Islands enacted the Mutual Funds (Amendment) Act, 2026 (Act 5 of 2026) and the Private Funds (Amendment) Act, 2026 (Act 6 of 2026), both commencing on 24 March 2026. The two Acts amend the Mutual Funds Act (2023 Revision) and the Private Funds Act (2020 Revision), respectively, to introduce a formal legal basis for tokenised investment funds in the Cayman Islands. Both Acts have been gazetted as final legislation; they are not consultation papers, pilot programmes, or transitional instruments. They take effect immediately on their commencement date without any phase-in period.

The Mutual Funds (Amendment) Act, 2026 and the Private Funds (Amendment) Act, 2026 amend their respective principal Acts by inserting provisions that recognise tokenised fund interests—fund shares, units, or limited partnership interests represented by or linked to digital tokens on a distributed ledger—as legally valid. The amendments authorise licensed or registered funds under the Cayman Islands Monetary Authority's (CIMA's) supervision to issue tokenised interests in lieu of or alongside conventional certificated interests. The Acts amend the existing definitions and record-keeping provisions of the principal Acts to accommodate on-chain registers. CIMA retains full regulatory authority over funds operating under the amended Acts, including powers of inspection, direction, and cancellation of registration or licence.

Investment funds domiciled in the Cayman Islands that wish to issue tokenised interests must amend their constitutional documents and fund offering documents to reflect the new structure, notify or apply to CIMA as required under the principal Acts, and ensure that any distributed ledger used for recording interests complies with applicable AML/CFT obligations under the Cayman Islands' Proceeds of Crime Act (2024 Revision) and CIMA's AML guidelines. Fund administrators and transfer agents must update their operational procedures for registering and transferring on-chain interests. Offshore law firms, fund service providers, and institutional investors structuring or investing in Cayman tokenised funds must assess whether existing fund documentation requires amendment.

No statutory safe harbour or grace period for existing funds wishing to adopt tokenisation is specified in either Act. Funds seeking to issue tokenised interests on existing fund structures must take affirmative steps under the amended Acts before doing so. The Cayman Islands does not yet have a comprehensive digital assets statute; these amendments operate within the existing regulated-funds perimeter and do not address secondary-market trading of tokenised interests outside the fund-subscription context. Whether CIMA will issue supplemental rules or guidance on tokenised fund registration procedures remains an open question.

Our firm advises on digital asset fund structures, tokenisation regulatory compliance, and Cayman Islands investment fund law. We maintain a dedicated partner network with offshore counsel to assist funds, managers, and service providers with this development. Contact us to discuss how the amended Acts affect your fund structure or tokenisation project. Our practice covers areas including tokenised fund structuring, digital asset regulatory compliance, CIMA licensing, distributed ledger legal frameworks, offshore fund documentation, and virtual asset AML obligations.

Source: Mutual Funds (Amendment) Act, 2026 (Act 5 of 2026); Private Funds (Amendment) Act, 2026 (Act 6 of 2026), Cayman Islands Legislation Website, https://legislation.gov.ky/cms/, confirmed 30 March 2026.

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