The Cayman Islands has taken a significant step forward by publishing three amendment Bills on 4 February 2026 that provide legal certainty and regulatory clarity for tokenised mutual funds and tokenised private funds. The Bills confirm that the operation of tokenised funds and importantly the issuance by a tokenised fund of digital tokens representing an equity or investment interest are most appropriately regulated within Cayman’s existing investment funds framework.
Under the proposed amendments, a tokenised fund is a mutual fund or private fund whose equity or investment interests are represented by digital tokens. The Mutual Funds (Amendment) Bill, 2026 defines a “digital equity token” as a digital representation of an investor’s entire equity interest in a mutual fund. Similarly, the Private Funds (Amendment) Bill, 2026 introduces the concept of a “digital investment token” for private funds.
The Bills impose several obligations on operators of tokenised funds. Fund operators must confirm annually to the Cayman Islands Monetary Authority (CIMA) that all records relating to the issuance, creation, sale, transfer, and ownership of digital tokens have been properly maintained. Additionally, any transfer of tokenised interests requires the operator’s approval in accordance with the offering document. Offering documents must also disclose risks specific to the digital tokens-including cybersecurity considerations and transferability-and explain how those risks are mitigated for investors.
CIMA will exercise supervisory powers over tokenised funds to ensure compliance and protect investor interests, including inspections of underlying technology and digital token transactions.
The Virtual Asset (Service Providers) (Amendment) Bill, 2026 clarifies that the issuance of digital tokens by regulated tokenised mutual funds and private funds does not constitute virtual asset issuance under the Virtual Asset (Service Providers) Act. This ensures that tokenised fund activities remain within the established funds regulatory regime rather than the virtual asset registration and licensing framework.
These amendments position the Cayman Islands as a forward-thinking jurisdiction for fund managers exploring blockchain-based investment structures.
