The Cayman Islands Implements Crypto-Asset Reporting Framework

The CARF provides for the automatic exchange of tax relevant-information on crypto-assets. In the same vein as the CRS, the CARF is intended to achieve transparency for transactions in crypto-assets by the annual, automatic exchange of crypto-asset transaction information among the participating jurisdictions whose tax residents hold or engage in crypto-asset transactions.

The definition of “Crypto-Assets” in the CARF focuses on the use of cryptographically secured distributed ledger technology or “similar technology”. This is intended to cover crypto-assets which can be held and transferred in a decentralized manner, without the intervention of traditional financial intermediaries, including stablecoins, derivatives issued in the form of a crypto-asset and certain NFTs. However, the CARF does not apply to crypto-assets which do not have the capacity of being used for payment or investment purposes, central bank digital currencies and specified electronic money products.

Individuals or entities that “as a business” provide services effectuating exchange transactions in Relevant Crypto-Assets, for and on behalf of customers are in scope of the CARF (“Reporting Crypto-Asset Service Providers”). This would cover, for example, Cayman Islands licensed crypto-asset exchanges and broker-dealers trading crypto-assets on behalf of customers, but would not include an investment fund which invests in crypto-assets or a token issuer.

The following transactions are relevant transactions which are reportable under the CARF:

1. 1. 1. exchanges between Relevant Crypto-Assets and fiat currencies;
      2. exchanges between one or more Relevant Crypto-Assets; and
      3. transfers of Relevant Crypto-Assets (including air drops, income derived from staking or a loan).

A transfer of Relevant Crypto-Assets includes a transfer of Relevant Crypto-Assets by a retail merchant in consideration of goods or services for a value exceeding US$50,000.

A Reporting Crypto-Asset Service Provider needs to (i) report on each customer who is a “Reportable User” i.e. if he/ she is resident in a Reportable Jurisdiction (being a jurisdiction which is subject to the CARF reporting) and (ii) determine whether a customer which is an entity has one or more controlling persons who are Reportable Persons.

For each type of transaction, a Reporting Crypto-Asset Service Provider must report:

1. 1. 1. identifying details of customers (name, address, date of birth, TIN and tax residence);
      2. details of transactions of Crypto-Assets, including the type of Crypto-Asset, the aggregate gross amount paid and the aggregate fair market value; and
      3. transfers to wallets not linked to a financial institution or service provider, enhancing visibility into self-custody holdings.

A Reporting Crypto-Asset Service Provider must maintain all documentation and data for a period of not less than 5 years.

A Reporting Crypto-Asset Service Provider must obtain a self-certification for each of its customers in order to determine their tax residence, in addition to any AML/ KYC collected in accordance with the Reporting Crypto-Asset Service Provider’s procedures.

The Tax Information Authority (International Tax Compliance) (Crypto-Asset Reporting Framework) Regulations, 2025 (“CARF Regulations”) and Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations, 2025 were published in the Cayman Islands Gazette on 27 November 2025 (together, the “Amendment Regulations”). The CARF Regulations implement the global Crypto-Asset Reporting Framework in the Cayman Islands to enhance tax transparency and fight evasion and money laundering.

Both Amendment Regulations take effect from 1 January 2026 (“Effective Date”).

The CARF Regulations apply the standard for automatic exchange of information relating to Crypto-Assets developed by the OECD.

Under the CARF Regulations, a Cayman Islands Reporting Crypto-Asset Service Provider will need to:

1. 1. 1. establish and maintain written policies and procedures to comply with the CARF;
      2. obtain a self-certification for each of its customers in order to determine their tax residence;
      3. register with the Cayman Islands Department for International Tax Co-operation as a Crypto-Asset Service Provider. For existing entities which are Cayman Islands Reporting Crypto-Asset Service Providers prior to the Effective Date, the deadline for registration is 30 April 2026. For all entities which become Cayman Islands Reporting Crypto-Asset Service Providers after the Effective Date, the deadline for registration is 31 January the following year;
      4. submit an annual return for each of its Crypto-Asset users who are Reportable Users or have Controlling Persons that are Reportable Persons by 30 June of the year following the calendar year to which the return relates; and
      5. retain all documents and records for 6 years.

Cayman Islands Reporting Crypto-Asset Service Provider can appoint an agent to carry out the duties imposed under the CARF Regulations and act as principal point of contact (“PPoC”) – the PPoC must be any entity or individual resident in the Cayman Islands.

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