Set Up a Cryptocurrency Hedge Fund in Luxembourg

Updated on Tuesday 18th September 2018

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Why start a cryptocurrency hedge fund in Luxembourg? 

Luxembourg represents one of the most developed markets for the registration of a hedge fund startup. In the last years, the number of the Luxembourg domiciled hedge funds increased at a steady rate, from a rate of 6% at the level of 2011, to 15,6% in 2015. One of the most suitable ways to enter the cryptocurrency sector is by registering a vehicle operating as a hedge fund. In this sense, it is important to know that most of the investments in this field are concluded in Bitcoin, Ethereum, Ripple and Litecoin

The next video provides a short presentation on the Luxembourg cryptocurrency hedge fund


What are the main characteristics of hedge funds registered in Luxembourg? 

Foreing investors who are interested in how to start a fund in Luxembourg that operates as a cryptocurrency hedge fund can benefit from a flexible legislation, which allows the registration of numerous types of structures. Luxembourg hedge funds can be set up under the Part II of the 2010 Law or the Specialised Investment Fund Law of 2007 and they have the following characteristics:
  • they can employ alternative investment strategies and use increased leverage and short selling;
  • they charge performance based fees, alongside with a management fee related to assets under management;
  • they benefit from a wider investment flexibility, as the managers are able to change their investment strategy;
  • as a general rule, they use a broker who can perform a set of investment activities – for example, the custody of assets

What are the main investment structures used for a Luxembourg hedge fund? 

One of the main aspects that have to be decided by those who are interested in how to start an investment fund in Luxembourg refers to the investment structure of the fund. A hedge fund can be set up as undertakings for collective investments in transferable securities (UCITS) or as undertakings for collective investments (UCIs)
Other business structures are also available for this type of fund, such as the specialized investment funds (SIFs) or reserved alternative investment funds (RAIFs). Investors may address to our team of partners in Luxembourg for advice on the regulations related to the registration of a hedge fund, as well as on the main requirements applicable to cryptocurrency investments.