Cryptocurrency

The financial service industry in Cayman is well positioned to support this new decentralised economic model, and The Virtual Asset (Service Providers) Law, 2020 has introduced a framework to regulate digital assets, in order to ensure that any risks associated with such activities are analysed and mitigated, that any benefits are realised in a manner consistent with a well-regulated financial services jurisdiction, and to develop sensible measures for blockchain innovation to thrive. It is widely speculated that this new technology has the potential to disrupt the current global economic model by providing a more efficient engine for the flow of assets across borders. In these early stages the process of investing in crypto assets is still being fine-tuned, but the basic procedure is to (i) purchase, (ii) transfer, and (iii) store a crypto asset(s).

(i) Purchase: Open an exchange account (e.g. Bitfinex, Gemini, CoinBase or Bitrex) and fund your account with a fiat currency.

(ii) Transfer: The most secure way to store crypto assets is within an application known as a wallet. Popular examples include Electrum or Bitcoin-Core for Bitcoin, MetaMask for Ethereum and Ledger or Jaxx for a multiple crypto asset storage solution. The wallet has a deposit button which appears to be a random set of characters, known as your public key (think ‘user name’). The exchange will have a withdrawal function, requiring your public key to send the crypto asset to your wallet. Once the transaction is executed on the exchange, a global network of computers (the decentralised ‘governance’, so to speak) will process the transaction and publicly confirm its successful completion.

(iii) Store: Your crypto asset is now stored in your wallet, for you to make purchases to another wallet, or make further transfers.

Anyone looking to secure large values of crypto assets should first speak to a technical expert.