Initial coin offering (ICO) refers to a method of raising capital, which is employed for launching cryptocurrency investments. ICOs can be a source of capital for starting a hedge fund in Hong Kong, which is one of the most common investment structures chosen by investors performing financial activities in the field of cryptocurrency.
 

Cryptocurrency activities have increased in the last 1-2 years at a global level, Hong Kong being one of the most developed markets in this sense. Although cryptocurrency investments and ICOs are new methods of performing financial activities, the local authorities are actively working at creating a legislative framework that will regulate this type of transactions.
 

As a general rule, most of the countries in which ICO activities are carried out do not have a solid framework addressing to this sector. In Hong Kong, ICOs are generally not regulated (for the moment), but specific activities can be considered as securities, in which case, such operations do fall under the country’s regulations. 
 

Foreign businessmen who are interested in how to start a fund in Hong Kong through ICO activities should know that the country’s financial regulator, the Securities and Futures Commission of Hong Kong, issued an announcement in the last quarter of 2017, stating that certain digital tokens activities can be regulated in this country, as follows: 
 

• dealing with digital tokens;

• advising on digital tokens;

• managing a fund which invests in ICOs;

• marketing a fund investing in digital tokens. 
 

In the situation in which the investment activity does fall under the Hong Kong regulations, it is necessary to register with the Securities and Futures Commission or to obtain a license. This will be necessary regardless of the jurisdictions in which the parties are located, as long as the ICO fund raising activities are offered to the public in Hong Kong. 
 

It is important to know that the local government sustains the development of this sector through several programs, which can be helpful for those setting up a hedge fund startup in this country. 
 

Businessmen interested in receiving further information regarding ICO activities are invited to contact our team of affiliates in Hong Kong, who can offer professional assistance on this matter.