A crypto fund is a managed capital of cryptocurrencies available to investors for duplication. Crypto funds serve as a connection between investors and traders in cryptocurrencies and are hoped to help them earn profits.
Crypto funds give investors the ability to invest in a more adaptable manner in various cryptocurrencies.
Why establish a Crypto fund in Luxembourg?
Luxembourg is the dominating fund center in the world for cross-border funds, It is the second largest investment fund hub in the world after the U.S. and the biggest fund domicile in Europe.
Luxembourg is a politically and financially stable EU country with a triple-A Rating. As an EU domicile, investment funds created in Luxembourg can be more easily distributed within the EU and have gained international recognition for the ease of cross-border distribution.
Which Luxembourg fund vehicle is relevant for a Crypto fund?
Luxembourg provides a range of solutions for setting up an investment fund, varying from supervised to non-supervised. A highly flexible fund vehicle that has been very successful and has proven to be a suitable choice for Crypto funds is the special limited partnership (SLP).
The SLP is suitable for a wide range of alternative strategies such as hedge funds, private equity and real estate, crypto, etc, and benefits from being domiciled in an onshore and reputable jurisdiction.
Why the Special Limited Partnership (SLP)?
The Luxembourg SLP generally has illiquid strategies and invests in real estate, private equity, or the debt market. It is also a highly flexible fund structure with no legal personality. The SLP is not restricted to any asset type and is not subject to any risk diversification rules.
Benefits of the Luxembourg Special Limited Partnership (SLP)
- It can be set up within a few weeks
- No prior regulatory approval is required
- Availability of an unlimited number of investors
- The SLP can invest in any and basically all type of assets
- No depository bank is required
- No audit is required
- Fully Tax transparent
Who manages the SLP?
The SLP must appoint a general partner (GP), generally a private limited liability company established in Luxembourg, to manage the fund on behalf of the limited partners (LPs). The SLP must have a GP, who has unlimited liability for the debts and duties of the SLP, which is the reason why the GP is generally another corporate entity offering limited liability (example, a sarl -limited liability company-).
Furthermore, the manager of an SLP registered as an AIFM does not need to procure prior authorization from the CSSF for the Crypto Fund strategy nor does he needs to complete an application file for registration as a virtual asset service provider.
The Special Limited Partnership can be considered the optimal solution in regard to the setup of a crypto fund in Luxembourg due to its flexibility to accommodate any kind of crypto strategy including quantitative, long only, long/short, and venture capital crypto funds, in addition to decentralized finance and security token offering fund.
Registering a cryptocurrency fund enables you to attract funds necessary for implementing your projects.
If you have any questions or need professional help registering your Luxembourg crypto fund, let’s go ahead and contact your Damalion expert now.
