In addition to being one of the most significant financial hubs in the world, Luxembourg was also one of the first countries to allow the use of ICO (Initial Coin Offering).
Luxembourg depicts one of the most evolved investment markets, being the first country to establish an investment fund. And as such, the Bitcoin market has pushed many promoters and asset managers to consider Luxembourg as a suitable location to set up their investment fund.
The process of setting up a crypto-fund in Luxembourg starts with an Initial coin offering (ICO) which is a distinguished way of raising funds for products and services usually connected with cryptocurrency.
Setting up the framework of your Bitcoin fund in Luxembourg
This process constitutes the preparation of a document containing the central information regarding the fund setup and must include the following components:
- The crypto-fund set up details and timelines
- Amount of capital assigned
- Tokens, and
- Profit to be paid per token to the Limited Partners (the investors)
Following the above steps, the Marketing campaign of the crypto fund is next in the crypto-fund setup process and the fund issuer will have to promote the project to obtain the needed capital.
Investment vehicles to register your Bitcoin fund in Luxembourg
Luxembourg is the home of the biggest variety of investment fund types, ranging from unregulated to regulated, supervised to non-supervised. And the most common options used for a bitcoin fund set up are the Special Limited Partnership (SLP) and Reserve Alternative Investment Fund (RAIF).
The Special Limited Partnership
The Special limited partnership (SLP) can be set up in Luxembourg by one General Partner and one Limited Partner (the investor). The Special Limited Partnership is a highly adaptable fund structure with no legal personality.
Why the SLP?
- It can be set up within a few weeks.
- No initial regulatory approval.
- It’s an Unregulated Alternative Investment Fund under the AIFMD
- No audit required.
- It is fully tax exempt in Luxembourg
- No custodian and regulated manager
- Bank account isn’t required in Luxembourg.
The Reserve Alternative Investment Fund (RAIF)
Bitcoin Funds can be set up as a Reserved Alternative Investment Fund and the fund can be used for direct or indirect investments. There is the obligation to have an Alternative Investment Fund Manager (AIFM) assigned to represent the fund as per the current law and the AIFM must acquire approval from the Commission de Surveillance du Secteur Financier (CSSF) before starting the investment activities.
The advantage of these two fund structures are;
- easy setup,
- flexibility,
- tax transparency, and
- can be set up within a few weeks.
Some structures of securitization can also be used ato adapt Bitcoins or any other assets into a certificate.
Being the globally dominating fund center in the world for cross-border funds, Luxembourg is the biggest fund domicile in Europe.
If you need assistance registering a crypto fund in Luxembourg, contact your Damalion experts now.
