Open Your Cryptocurrency Hedge Fund in Netherlands
Updated on Tuesday 30th January 2018
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An increasing number of businessmen have started investing in cryptocurrency hedge funds in top investment jurisdictions, including the Netherlands. At the level of October 2017, there were more than 120 hedge funds that invested in virtual currencies. Investors interested in starting a hedge fund in the Netherlands or in another important investment jurisdiction should take into consideration that out of these vehicles, more than 90 funds were launched in 2017, specialized in various types of virtual currencies. The cryptocurrency hedge funds launched in the last years held assets under management with a total value of more than $2,3 billion.
Dutch regulations on hedge funds
Hedge fund startups in the Netherlands may be set up as open-ended or closed-ended structures.
In the case of a hedge fund registered as a open-end structure, the investors will be able to set up the following:
• investment company;
• investment fund.
It is compulsory to set up a management company to manage the fund’s assets in the situation in which the cryptocurrency hedge fund will be registered as an investment vehicle and not as an investment company. In the case of a closed-ended fund, the investors have the same options, with the main difference that they may issue only a limited number of shares.
Dutch hedge funds are regulated under the Alternative Investment Fund Managers Directive (AIFMD), implemented by the European Union.
A characteristic of the vehicles set up as hedge funds is that the investors can achieve their investment strategies in a short period of time, even though long-term strategies can be completed through this type of structure.
The manager of a management company representing a Dutch hedge fund is required to obtain an authorization from the Authority for the Financial Markets (AFM).
Why invest in cryptocurrency hedge funds?
One of the main advantages of an investment in cryptocurrencies refers to the growth rate of these types of vehicles. On a year to year basis, transactions in virtual currencies (Bitcoin in this case) increased by 700% (compared to 2016). Another virtual currency that has attracted numerous investments is Ether, which increased by 3,300% on a yearly basis.
Businessmen interested in how to start an investment fund in this jurisdiction that will perform investments in virtual currencies may contact our team of affiliates in the Netherlands for professional advice.