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How to open a crypto fund

How to open a crypto fund

Cryptocurrency fans are obtaining more and more possibilities for investment, and crypto funds are excellent confirmation of this. Today we are revealing the nuances of the registration of a crypto fund

What is crypto fund?

Crypto fund is an investment fund with cryptocurrency as the main asset. It manages depositors’ digital assets: an investor transfers his cryptocurrency to the founders in trust management, and the latter puts them into calculation, later paying back the profit from income received as the result of investment (investment in prominent startups within ICO, token purchase, cryptocurrency trading).

The main task of this structure is to get maximum return, multiply the capital, and redistribute assets according to the situation on the market. 

How to register a crypto fund?

Today, there exist two options to launch these organizations:

  • cryptocurrency hedge funds (accept funds from all investors, since the threshold of investment is reduced);
  • mutual funds.

Structural models open up broad perspectives for profit-making, and require fewer expenses compared to traditional funds.

The procedure of crypto fund registration depends on the taxation and legal status of the cryptocurrency in the country you plan to work in. The following stages are often required:

  • register a business;
  • provide the package of services to confirm the legality of company assets;
  • obtain a license.

What does crypto fund license offer?

Crypto license enables the provision of services in the legal field. Legal business, build according to the principles of mutual cooperation, always conquers the trust of clients and investors, especially if you plan to attract further investment. Besides, a licensed company bears responsibility, as well as traditional financial companies that work with fiat money.

What is required to obtain a crypto fund license?

There is no single algorithm to obtain the crypto fund license, because every country has its own requirements for the registration and management of crypto activity. Primarily, you must choose the jurisdiction, explore the process of crypto assets regulation, terms, conditions, and the cost of crypto fund creation, as well as the requirements and restrictions associated with it. The package of documents changes depending on the country selected, and the minimum list to establish the fund and obtain the license includes:

  • memorandum with the basic information (structure, location, investment goals, policy and limitations, risks and fees);
  • regulatory documents depend on the form of ownership (charter or partnership agreement);
  • management agreements (if the fund is managed by the third party), as well as investment custodial and management agreements.

What regions provide crypto fund licensing?

Let’s look at several jurisdictions to obtain the license and register a crypto fund

Estonia

Stable political environment and crypto market regulation (Mutual Funds Law) focused on transparency increase of a business and security provision for investors, made the jurisdiction one of the most crypto-friendly. Crypto fund registration in Estonia has a range of advantages:

  • liberal economic policy;
  • possibility of remote registration;
  • low level of corruption;
  • openness to foreign investment;
  • possibility to start the business in European jurisdiction, obtain citizenship or residence permit;
  • developed banking sector;
  • loyal taxation.

Cayman Islands

It is one of the most popular jurisdictions where ¾ of world hedge funds are registered. Digital asset market is regulated by the Cayman Islands Monetary Authority (CIMA). There are several reasons to launch crypto funds here:

  • stable political environment;
  • fast online registration;
  • absence of legislative requirements for the residency of the fund’s founders and employees of the fund;
  • zero tax rates and VAT;
  • no requirements for minimum charter capital.

Switzerland

Crypto fund registration applications in Switzerland are considered by Swiss Financial Market Supervisory Authority (FINMA).

Switzerland jurisdiction has the following peculiarities:

  • investment is possible only through the platforms located in the country-member of FATF group;
  • crypto fund can invest only in established assets based on blockchain technology;
  • anti-money laundering regulations must be strictly observed;
  • crypto funds are designed only for professional investors.

Liechtenstein

Crypto funds in this jurisdiction are recognized as a legal business model. Financial Market Authority of Liechtenstein (FMA) contributes to the development of cryptocurrency market and directly assists investors to create a hedge fund.

More detailed info on the selection of jurisdiction for the launch of crypto project can be provided by the SBSB lawyers. 

Where services are available?

The SBSB lawyers specialize in two directions — FinTech and Crypto, providing a complete complex of cryptocurrency fund registration throughout the world. 

We offer individual solutions to our clients and help realize your ideas from scratch to the result: register a company, obtain the license, create a fund, and support the project after the launch. Contact us, and we will answer the questions you are interested in!

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