Cryptocurrency Hedge Fund Formation

Cryptocurrency Hedge Fund Formation

The surge in popularity of Bitcoin and other cryptocurrencies have created a new investment asset class. Due to the rapidly evolving regulatory environment and the available liquidity in the cryptocurrency space, investment fund managers have decided to make investments in this nascent sector. The growth of this sector has prompted the creation of derivatives, futures and structured products based on the underlying cryptocurrencies. We can help you launch a cryptocurrency hedge fund or modify your existing hedge fund’s structure, investment strategy or provisions in order to allow you to make investments in the cryptocurrency sector.

We assist cryptocurrency hedge funds with all aspects of the fund launch process, from pre-launch formation and structuring, to post-launch ongoing regulatory matters. Our cryptocurrency hedge fund legal services include:

  • Structuring funds to attract U.S. based investors with a traditional domestic fund structure or offshore and U.S. tax-exempt investors by establishing offshore structures, including “master” and “mini-master” feeder structures, in offshore jurisdictions.
  • Establishing funds and entities in jurisdictions where investment adviser registration is required or an exemption to investment adviser registration exists.
  • Navigating compliance obligations, including determining whether the fund’s investment adviser needs to register as an investment adviser with the SEC or submit filings as an exempt reporting adviser at the federal and state levels.
  • Registration of your fund’s investment adviser as an investment adviser with the SEC once your fund’s collective AUM reaches more than $150 million USD.
  • Registering your fund’s investment advisory firm with the SEC, CFTC, NFA or in any offshore jurisdiction.
  • Advising your fund on its entity structure, fund manager compensation, fund liquidity provisions, fund valuation procedures, side letter arrangements, fund liquidity provisions and risk disclosures presented by the cryptocurrency asset class.
  • Preparing your fund’s private placement memorandum, limited partnership agreement, subscription documents, investment advisory contract and management company operating agreements for domestic and offshore entities.
  • Assisting fund managers in providing a description of its cryptocurrency investment strategy and the type of investment instruments used to employ the strategy on the fund’s offering documents.
  • Advising on AML & KYC compliance during the fund’s formation and FCPA compliance on investments made by the fund.
  • Providing up to date legal compliance to fund managers on regulatory developments by the SEC, FINRA, CFTC, NFA and FinCEN regarding the regulation of cryptocurrencies.
  • Preparing and filing SEC Form D and state “blue sky” filings for your fund.
  • Providing you advice on capital raising rules and regulations such as the general solicitation of cryptocurrency hedge fund investors via Rule 506(c) of Regulation D and the accredited investor verification requirements under Rule 501 of Regulation D.
  • Offering ongoing support when key regulatory challenges facing cryptocurrencies and cryptocurrency hedge funds emerge, including whether or not regulators determine ICO, STO or TGE underlying fund investments to be securities under U.S. federal and state laws.
  • Guiding your fund in determining whether cryptocurrency options, derivatives and other products based on blockchain technology come under federal commodity futures and currency market regulations.
  • Introduce you to our network of hedge fund service providers such as fund administrators, auditors, prime brokers, and other service providers experienced with providing these services to cryptocurrency hedge funds.

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