Although, every time a friend consults about crypto funds, Mankiw will recommend 1~2, such as Cayman and Hong Kong. Usually, the suggestions we give are based on the comprehensive consideration of establishment costs (such as money, time), crypto-friendliness and more relevant policy dimensions.
But sometimes, Mankiw is asked: Where are those famous crypto funds established? Therefore, in this article, Mankiw will take stock of where the 40 top global crypto funds are registered and what are the advantages of these registration places.
According to lawyer Mankiw, most of the top crypto funds are registered in the following regions: Cayman Islands, the United States (Delaware), Seychelles, Singapore, Hong Kong, China, and the United Arab Emirates (Dubai) . These regions have become popular choices for crypto funds due to their policy-friendly, clear legal framework, and tax incentives.
Cayman Islands: A Tax Haven for Crypto Funds
For funds that target global investors and focus on tax optimization, the Cayman Islands offers unparalleled advantages. Cayman implements zero capital gains tax and corporate income tax, which significantly reduces operating costs. In terms of supervision, Cayman's Securities Investment Fund Law (SIBL) adopts a relaxed policy for private equity and hedge funds, and only requires simple filing to carry out compliance activities. Global recognition makes Cayman a trusted choice for European and American investors.
However, all this does not mean that you can completely relax. Cayman has extremely strict requirements for anti-money laundering (AML) and know your customer (KYC). After registration, the fund needs to submit financial statements regularly and hire a local registered agent to conduct compliance management. Therefore, Mankiw recommends that funds planning to register in Cayman should set up internal control mechanisms in advance and hire a professional compliance team to ensure long-term stable operations.
United States (Delaware): Dual protection of law and innovation
As the preferred place for fund registration in the United States, Delaware has become the first choice for many top crypto funds with its highly flexible legal system and deep investor trust. The Delaware General Corporation Law allows funds to have a high degree of freedom in structural design, which is particularly suitable for funds that need to balance the interests of different investors.
In addition, Delaware funds are more transparent due to SEC supervision, which makes international investors more confident in their legitimacy and stability. However, this also means that Delaware registered funds need to strictly fulfill their reporting obligations, such as submitting financial and operating reports to the SEC on a regular basis.
Attorney Mankiw recommends that when choosing Delaware, priority should be given to whether the fund's target investment group tends to trust U.S. law, while ensuring that the fund is able to afford the higher compliance costs.
Singapore: Asia Pacific Crypto Hub
Singapore is a financial center in the Asia-Pacific region. Its inclusiveness and clear legal framework for crypto funds have attracted a large number of fund registrations. The implementation of the Payment Services Act (PSA) provides a clear regulatory path for crypto funds, and the capital gains tax exemption policy has become the core attraction of the fund.
In addition, Singapore is close to China, Japan and Southeast Asian markets, and its geographical location is excellent, making it particularly suitable for funds that want to expand their business in the Asia-Pacific region. However, although Singapore's regulatory environment is friendly, fund managers need to apply for specific licenses (such as RFMC or VCF) and comply with anti-money laundering and annual reporting requirements.
Therefore, Mankiw recommends that funds planning to register in Singapore should make long-term plans for license applications and annual compliance, and at the same time explore more investment opportunities in the regional market with the help of the fintech support of the Monetary Authority of Singapore (MAS).
Hong Kong: An emerging hotspot for crypto funds
As Hong Kong increases its support for Web3 and the virtual asset industry, it has become an emerging choice for many crypto funds. Hong Kong's tax system is simple and has low tax rates, which is a very friendly operating environment for funds. In addition, as an international financial center, Hong Kong not only provides funds with convenient capital flow channels, but also provides important endorsements for attracting international investors.
However, virtual asset funds registered in Hong Kong need to comply with the management requirements of the Hong Kong Securities and Futures Commission (SFC), which places high demands on the fund's operational transparency and compliance.
Attorney Mankiw suggested that funds planning to register in Hong Kong can make full use of its policy window period, give priority to obtaining licenses, and at the same time combine Hong Kong's regional advantages to attract investors from Greater China.
UAE (Dubai): An emerging “regulatory oasis”
Dubai and Abu Dhabi in the UAE provide unique opportunities for crypto funds. Zero capital gains tax and corporate tax make it one of the preferred places for tax optimization. In addition, the Dubai International Financial Center (DIFC) and the Abu Dhabi Global Market (ADGM) provide exclusive financial legal frameworks to ensure that crypto funds can conduct diversified business under the legal premise.
However, funds operating in Dubai are still subject to specific compliance requirements, including registration in a free zone and participation in a regulatory sandbox program.
Attorney Mankiw suggested that funds planning to enter the Middle East and North African markets could use Dubai as a regional operations center and further expand into emerging markets through cooperation with local institutions.
From the tax haven of the Cayman Islands to the legal protection of Delaware, to the regional advantages of Singapore and Hong Kong, each place of registration provides a tailor-made solution for crypto funds. For crypto funds, choosing a suitable place of registration is not only a consideration of operating costs, but also the key to market expansion and compliance competitiveness.
Here, Mankiw believes that when choosing a place of registration, one should not only pay attention to the advantages of a single region, but also:
1. The choice of registered place should be based on the investment objectives of the fund
For crypto funds targeting global investors, especially high net worth groups in Europe and the United States, the Cayman Islands and Delaware provide strong international recognition and legal protection. Crypto funds focusing on the Asia-Pacific market can take advantage of the regional advantages of Singapore and Hong Kong. These two regions are not only close to major technology and capital centers, but their policies and tax environments also provide stable support for crypto funds. If crypto funds plan to explore the Middle East or emerging markets, Dubai, with its zero tax policy and inclusive regulatory environment, can provide a broad testing ground.
2. Fund founders need to consider costs and compliance
Although the Cayman Islands has become a popular choice due to its low tax policy, the local registered agent services and compliance costs may put pressure on small-scale funds. Similarly, although Delaware enjoys a high degree of trust in the international capital market, its strict SEC supervision means higher information disclosure and tax reporting obligations. In contrast, although Singapore and Hong Kong have high compliance requirements, the tax incentives and capital gains tax exemption policies they provide can significantly reduce long-term operating costs under reasonable planning.
Therefore, when formulating a registration location strategy, the size and budget of the fund should be taken into consideration, and a balance between tax benefits and compliance burdens should be found through detailed cost analysis. The structural design should be adjusted as needed, such as optimizing taxes through an SPV (special purpose vehicle) or setting up sub-funds to disperse compliance pressure.
3. Changes in the policy environment also provide crypto funds with opportunities to seize the initiative
Policies are always the direction of industry development. In recent years, whether in the United States, Hong Kong, China, or even Europe, more and more clear regulatory policies are being implemented. For example, Hong Kong has recently increased its support for the Web3 industry, providing more license openings and policy support for virtual asset funds, which is a policy window period worthy of attention. At the same time, Dubai provides funds with an exclusive legal framework through the International Financial Center (DIFC) and free zones, attracting a large number of funds to pay attention to the Middle East market. In the United States, despite stricter supervision, Delaware funds are gradually gaining higher compliance transparency and legal protection through new regulations such as the Crypto Asset Market Structure Act.
For crypto funds, seizing the window of these policy changes and quickly completing registration can significantly improve the market competitiveness of the funds.
