Page 16 - Layout 1

FinTech
Gibraltar, the crypto fund capital
By James Lasry, Deputy Head, Financial Services, Hassans International Law Firm Limited
Over the last few years, a number of developments in Gibraltar from disparate fields have converged to create the ultimate eco-system for crypto funds. Although this has
been evident to many Gibraltar practitioners for some time, it has now become apparent on an international basis through the publication of PwC’s 3rd Annual Global Crypto Hedge Fund Report for 2021 which lists Gibraltar as in the top three jurisdictions in the world for the establishment of crypto funds and for the management of digital assets. Let us analyse these elements individually.
The Regulatory Regime
The Experienced Investor Fund regime in Gibraltar has long been known as an innovative regime that replicates much of the flexibility one has come to expect from Cayman Islands’ funds, while existing in an OECD white listed and robust, European style regulatory framework. The EIF regime is the only such regime on this side of the ‘pond’ that allows a fund to be launched and widely marketed without any regulatory
pre-authorisation for all categories of funds. This is done on the basis of a legal opinion from a senior Gibraltar lawyer, validation from an authorised fund administrator and the presence of two authorised directors on the board of every EIF. While a comprehensive regulatory review does indeed take place,
it does so after the funds launches, which means that there is no regulatory down time. Some jurisdictions have similar products, but these involve the presence (and the cost) of heavily regulated managers and therefore would generally not be suitable for the establishment of a sub-AIFM threshold crypto fund. The EIF regime places no restriction
on classes of assets, which means that there is no impediment for an EIF to invest in digital assets. Indeed, the Gibraltar Financial Services Commission has issued a circular confirming that EIFs may be used for the creation of crypto funds.
Responsible Crypto Governance Although there are no statutory restrictions pertaining to crypto funds, there are clearly
Continued p18
16
Gibraltar International
www.gibraltarinternational.com