Web3 Fund Access Guide: Dismantling the compliance architecture of the six global mainstream encryption funds
Original author: Zhang Tsing Wen, Cheng Zhong
Introduction
As encrypted assets move from a single transaction to specialized asset management, an increasing number of Web3 projectors, quantitative teams and high net worth individuals have begun to use fund structures to operate encrypted assets. In this processThe choice of the legal framework of the Fund is no longer a matter of formRather, it relates directly to underlying decisions on risk segregation, tax treatment and long-term compliance operations。
From a regulatory point of view, the differences between the different jurisdictions in terms of the systems for the establishment of funds, regulatory requirements and tax arrangements determine the appropriate investment strategy and fundraising. Whether it's a multi-strategy quantitative transaction, a first-level market investment, or a family office asset allocationthere is no “ optimal structure ” only &ldquo that matches the business model; suitable structure &rdquo。
This paper will dismantle six of the world's leading encryption fundsAnalysis of its core mechanisms and applicable scenarios to inform the manager ' s compliance layout。
Cayman SPC: &ldquao for multi-strategy parallel; Umbrella &rdquao;
SPC (INDEPENDENT PORTFOLIO) IS A FORM OF COMPANY IN THE CAYMAN ISLANDS, THE GREATEST FEATURE OF WHICH IS ITS ABILITY TOUNDER THE LEGAL ENTITY, THERE ARE SEVERAL SEPARATE PORTFOLIOS (SPS)。
- Core mechanism: risk segregation
Each SP asset and debt is legally separate. For example, the A strategy is cash-deficit, and its creditors can only ask for A money, not for B strategy money. This is important for a volatile encryption market that can effectively prevent a strategy & ldquo; thunderstorm & rdquo; and drag the whole picture。
- Applicable scene:
SPC CAN DO THIS WHEN MANAGERS OPERATE HIGH-RISK AND LOW-RISK STRATEGIES SIMULTANEOUSLYLet's settle our scoresI DON'T KNOW. AT THE SAME TIME, IF NEW PRODUCTS WERE TO BE PRODUCED, A NEW SUB-FUND WOULD BE CREATED DIRECTLY UNDER THE EXISTING SPC AND WOULD NOT NEED TO BE RE-REGISTERED AT LOW COST AND SPEED。It's for a team that wants to quickly hatch a new strategy。
Cayman ELP: &ldquao suitable for first-level market investments; partnership architecture &rdquao;
UNLIKE THE SPC ' S CORPORATE STRUCTURE, ELP IS A PARTNERSHIP STRUCTURE BASED ON THE EXEMPT LIMITED PARTNERSHIP ACT, WHICH DOES NOT HAVE AN INDEPENDENT LEGAL PERSONALITY BUT IS A CONTRACTUAL RELATIONSHIP BETWEEN THE GENERAL PARTNER (GP) AND THE LIMITED PARTNER (LP)。ELP IS WIDELY USED IN THE AREAS OF VENTURE CAPITAL (VC) AND PRIVATE EQUITY (PE)。
- Core mechanisms: clear division of labour
GP (GENERAL PARTNER)RESPONSIBLE FOR MANAGING MONEY AND INVESTMENT, WITH UNLIMITED LIABILITY (IN PRACTICE, A LIMITED COMPANY IS USED AS A GP TO ISOLATE RISKS)LP (LIMITED PARTNERS)Pay, not participate, and liability is limited to the amount of the contribution。
- Applicable scene:
Level-I market investments involve complex distribution of proceeds, and the Partnership Agreement gives flexibility to agree on how and when to split. In additionTHE ELP HAS TAX PENETRATION, THE FUND LEVEL IS NOT TAXED AND THE LP LIST IS NOT PUBLICLY DISCLOSED, TAKING INTO ACCOUNT TAX EFFICIENCY AND PRIVACY PROTECTION。
BVI Approved Fund: &ldquao for small teams; introductory compliance programme &rdquao;
YeahA small, start-up teamTHE APPROVED FUND FOR BVI (BRITISH VIRGIN ISLANDS) PROVIDES A LOW COMPLIANCE THRESHOLD AND MANAGEABLE OPTION。
- Core mechanisms: filing, simplification of controls
The installation is fast enough to be approved two or three days after the submission. Operating costs can be significantly reduced without mandatory access to auditors or local custodians。
- Apply scene
Suitable for managementTeams below $10 million, still in the validation phaseI don't know. The compliance body could be established at a lower cost, with a cumulative record of performance. The investor ceiling is 20 and the asset size cap is $100 million, which is suitable for fund-raising in familiar circles or communities。
VCC Singapore: &ldquo for compliance and landing; Inshore Fund Architecture ”
THE VCC (VARIABLE CAPITAL CORPORATION) IS A FORM OF FUND INTRODUCED BY SINGAPORE THAT PRESERVES THE FLEXIBILITY OF OFFSHORE FUNDS AND THE REGULATORY ENDORSEMENT OF THE SINGAPORE FINANCE AUTHORITY (MAS)。
- Core mechanisms: umbrella structure + tax incentives
THE VCC ALSO SUPPORTS THE CREATION OF SEVERAL SUB-FUNDS WITH SEPARATE ASSETS. MOST IMPORTANTLY, A TAX EXEMPTION OF 13O/13U CAN BE REQUESTED, WITH TAX EXEMPTIONS FOR ELIGIBLE INVESTMENT EARNINGS AND NO PREPAID TAXES。
- Apply scene
FitYou want to set up an office in Singapore, get a visa, build a family officeI don't know. Both internationally recognized compliance identities and the ability to protect investors ' privacy (shareholders ' rosters are not open) are attractive in the search for long-term robust capital。
Hong Kong LPF: &ldquao connecting Asian markets; cross-border fund access &rdquao;
THE LPF (LIMITED PARTNERSHIP FUND) IS THE LOCALIZATION FUND STRUCTURE INTRODUCED BY HONG KONG FOR THE BEACON ELP AND IS REGISTERED AND ADMINISTERED IN HONG KONG AND GOVERNED BY HONG KONG LAW。
- Core mechanism: Localized limited partnerships
THE STRUCTURE IS SIMILAR TO THE CAYMAN ELP, BUT ALL LEGAL MATTERS, OPENING OF ACCOUNTS AND COMMUNICATION ARE PERFORMED LOCALLY, WITH NO TIME LAGS OR LANGUAGE BARRIERS。
- Apply scene
If the team..LPFS ARE EASILY ACCESSIBLE TO LAWYERS, BANK ACCOUNTS AND DAILY MAINTENANCE, MAINLY IN ASIA。TOGETHER WITH THE CONSOLIDATED FUND EXEMPTION SYSTEM (UFE) IN HONG KONG, ELIGIBLE FUNDS ARE ELIGIBLE FOR A PROFIT TAX EXEMPTION AND THE TAX ENVIRONMENT IS RELATIVELY FRIENDLY。
Hong Kong OFC: &ldquao suitable for public collection or ETF issuance; open fund structure &rdquao;
OFC (OPEN FUND CORPORATION) IS A CORPORATE, OPEN FUND WITH AN INDEPENDENT LEGAL PERSONALITY THAT IS FLEXIBLE IN DEALING WITH INVESTOR BUY-BACKS。
- Core mechanisms: variable equity and flexible structure
OFC MAY AT ANY TIME INCREASE OR REDUCE ITS SHARES ON THE BASIS OF THE DEMAND FOR RANSOM, THEREBY OVERSTEPPING THE LIMITATION ON THE REDUCTION OF CAPITAL BY TRADITIONAL COMPANIES. IT CAN BE EITHER PRIVATE OR PUBLIC (SUBJECT TO SFC APPROVAL)。
- Applicable scene:
THE GOVERNMENT OF HONG KONG IS ENCOURAGING THE DEVELOPMENT OF OFCS BY PROVIDING UP TO 70 PER CENT OF THE SET-UP COST REIMBURSEMENT (UP TO HK$ 1 MILLION PER UNIT), WHICH EFFECTIVELY REDUCES START-UP COSTS. AT THE SAME TIME, OFC IS ONE OF THE MAINSTREAM STRUCTURES IN HONG KONG THAT CURRENTLY ISSUES VIRTUAL ASSETS, ETF, FOR PUBLIC FUNDRAISINGHigh mobility trading strategyI don't know。
Overview of the core features of the six structures
A synthesis of the above analysis summarizes the legal features and applicable scenarios of the six mainstream fund structures as follows:
Concluding remarks
in the area of encrypted assets, the issue of fund architecture has never been “ whether or not to set ” but “When and in what form? Set”. the different legal structures are not just related to how taxes are paid, how regulations are administered, how risks are assumed, how investors participate, and how future business models work。
The structure of these funds, as described here, is not in itself good or badIt's important to see if it matches your business model, investment strategy and target investment. PeopleI don't know. For managers who have operated or intend to operate encrypted assets in the form of a fund, the early identification and finalization of structural problems is in itself an important risk control。
