Bitcoin and other cryptocurrency hedge funds (including Ethereum, Litecoin and other blockchain-based currencies) have experienced a recent surge in popularity. Due to the rapidly evolving regulatory environment surrounding Bitcoin and other cryptocurrency hedge funds, it is essential for issuers in the space to engage qualified legal counsel to assist with fund launches. We assist Bitcoin and cryptocurrency investment fund managers with all aspects of the fund launch process, from pre-launch structuring to post-launch regulatory matters. Our Bitcoin and cryptocurrency hedge fund legal services include:
- Advising managers regarding overall fund structure, including manager compensation, custodial matters, liquidity terms, appropriate risk disclosures, etc.
- Addressing the unique legal and regulatory issues inherent to cryptocurrency / virtual currency hedge funds, including whether the underlying investments in existing cryptocurrencies and initial coin offerings (ICOs) are considered “securities” under federal and state law
- Working with managers to accurately describe cryptocurrency and virtual currency investment strategies and instruments traded
- Updating managers regarding the latest regulatory developments, including relevant releases by the Securities and Exchange Commission (SEC) and the Commodity Futures and Trading Commission (CFTC) regarding their respective authority to regulate existing cryptocurrencies, ICOs and/or cryptocurrency derivatives.
- Preparing customized fund offering documents, including a private placement memorandum, a limited partnership agreement / operating agreement and subscription documents for individual and institutional investors
- Structuring the management company that will serve as the fund manager and drafting the company’s operating agreement
- Helping the manager navigate its initial compliance obligations, including helping the manager determine whether it needs to register as an investment adviser or file as an exempt reporting adviser at the federal and state levels
- Preparing required regulatory filings on behalf of the manager and the fund, including entity formation documents, SEC Form D filings and state “blue sky” notices
- Assisting with selecting and negotiating agreements with other fund service providers, including third-party administrators, auditors, brokers and custodians
- Drafting investor side letter agreements, seed capital arrangements and other investor negotiations
- Advising managers regarding the use of broker-dealers and finders in connection with capital raising and negotiating third-party marketing agreements
- Handling ongoing compliance and regulatory matters, including preparing and filing Form D annual amendments, “blue sky” renewal filings, and Form ADV annual updating amendments, as well as reviewing and updating the fund’s offering documents to address recent changes to rules and regulations at the federal and state levels
If you have any questions regarding our Bitcoin and cryptocurrency hedge fund formation services or would like to schedule a free consultation, please do not hesitate to contact us.