Cayman Hedge Funds vs. Singapore VCC (and the Rest):

Why Cayman Still Dominates – Especially for Digital Asset Funds

At CV5 Capital, we see this every day: institutional allocators, emerging managers and crypto-native funds overwhelmingly choose Cayman as their primary fund domicile, often using other jurisdictions only as specialist “add-ons” rather than replacements.

This article compares Cayman hedge funds with the Singapore VCC, Luxembourg and Guernsey in terms of cost, ongoing requirements, and market position, with a particular focus on digital asset funds, and explains how CV5 Capital helps managers leverage the Cayman advantage.

1. Cayman’s Global Hedge Fund Dominance – By the Numbers

Multiple independent sources converge on the same story: Cayman is the centre of gravity for hedge funds.
• AIMA and industry surveys estimate that 70–80% of the world’s hedge funds are domiciled in the Cayman Islands.
• Asset Servicing Times reports that around 70% of global hedge fund assets are domiciled in Cayman.
• SEC Form PF data, analysed by Walkers, shows Cayman accounting for 53.6% of all “qualifying hedge fund” net assets reported to the SEC.
• As at 31 December 2024, there were 12,858 open-ended funds registered under the Cayman Mutual Funds Act, with private funds also at record highs.

Cayman’s importance is so great that recent Federal Reserve work on the Treasury basis trade estimates Cayman-domiciled hedge funds held roughly US$1.85 trillion of U.S. Treasuries at the end of 2024 — more than any single sovereign holder and 37% of net issuance over 2022–2024.

In other words: Cayman is not just “one of” the main hedge fund domiciles. It is the systemic hedge fund jurisdiction.

2. Digital Asset & Crypto Hedge Funds: Cayman’s Lead Is Even Bigger

The dominance is even clearer in digital asset funds:
• PwC’s 6ᵗʰ Global Crypto Hedge Fund Report found 63% of crypto hedge funds were domiciled in Cayman, far ahead of Gibraltar (19%) and the US (16%).
• The most recent 7ᵗʰ Global Crypto Hedge Fund Report shows Cayman still in first place with 58% of crypto asset funds, again well ahead of the US (13%), Gibraltar and BVI (6% each).
• Industry commentary consistently points to Cayman as the preferred domicile for digital asset funds because of tax neutrality, regulatory familiarity and mature service-provider infrastructure.

For managers launching a crypto or digital-asset-heavy hedge fund, Cayman is the clear statistical choice.

3. Cayman vs. Singapore VCC – Cost and Ongoing Requirements

Singapore’s VCC was launched to create an onshore Asian alternative to Cayman. It is a well-designed structure, and for some Singapore-centric strategies it makes sense. But when you look at costs, ongoing obligations and global allocator familiarity, Cayman remains superior for most hedge funds.

3.1 Set-up and ongoing costs

Singapore VCC:
• Statutory fees include:
• S$8,000 incorporation fee per VCC;
• S$400 per sub-fund registration;
• Annual filing fees.
• Typical professional costs for a “plain vanilla” VCC:
• S$60,000–90,000 for legal and tax work for a standard structure;
• Additional ongoing spend requirements if the fund wants to avail itself of Singapore’s 13O/13U tax incentives (minimum fund size, local expenditure, number of investment professionals, etc.).
• The VCC Grant Scheme that subsidised up to 30% of eligible set-up costs (capped at S$30,000) was extended only until 15 January 2025, and is now no longer available.

Cayman hedge fund / SPC:
• Cayman does not have a one-size-fits-all fee schedule in the same way, but comparative work by KPMG and others notes that:
• Cayman structures generally provide a faster path to market with lower set-up and running costs compared to Luxembourg and other heavily regulated onshore domiciles.
• Government registration fees and annual CIMA fees remain modest relative to the global norm, especially against the scale of institutional strategies.
• For managers using a platform structure like CV5 SPC or CV5 Digital SPC, incremental legal and regulatory costs for each new fund/SP can be materially lower than launching a fully standalone VCC.

In practice, once you account for Singapore’s tax-incentive conditions (minimum size, local spend, staff, etc.), Cayman is usually more cost-efficient on an all-in basis for global hedge funds that are not explicitly built around Singapore as a core nexus.

3.2 Ongoing regulatory and governance requirements

Singapore VCC – tightening regime

Recent regulatory developments have increased the governance and compliance load for VCCs:
• In June 2025, MAS issued Circular IID 04/2025 following a thematic review of VCCs and their managers, highlighting weaknesses in governance, board oversight, custody arrangements and AML controls, and setting out enhanced supervisory expectations.
• VCC tax incentive schemes (13O/13U) require:
• Minimum fund size (e.g. S$50m under 13U),
• Minimum local business spending, and
• A Singapore-licensed or registered fund manager with at least 2–3 investment professionals.

These are entirely reasonable standards, but they raise the minimum scale and cost-base required to run a VCC fund, making it less appealing for smaller or non-Asia-centric hedge funds.

Cayman – focused, fund-specific regulation

By contrast, Cayman:
• Applies a fund-specific regulatory regime under the Mutual Funds Act / Private Funds Act, focused on:
• Registration with CIMA;
• Appointment of approved auditor and administrator;
• Robust AML, KYC, FATCA/CRS processes;
• Valuation, custody and audit requirements appropriate for professional-investor funds.
• Does not impose:
• Local corporate tax or economic-substance tests at the fund level for classic hedge fund strategies;
• Minimum fund size or prescribed local spending requirements;
• A mandatory local investment-management presence (managers can be in New York, London, Dubai, Singapore, etc., with Cayman as a neutral fund hub).

That combination of robust but targeted fund regulation with tax neutrality and global manager flexibility is a key reason Cayman remains the default for cross-border hedge funds.

4. Cayman vs. Luxembourg and Guernsey

Luxembourg and Guernsey are high-quality fund centres, but their sweet spot is different.

4.1 Luxembourg – the EU gateway, not the global hedge hub

Luxembourg is:
• One of the two largest domiciles for UCITS and AIFs in Europe, with around 26–27% of EU fund assets.
• The preferred home for many private equity, private credit, and real-asset funds aiming at EU distribution.

But for hedge funds:
• ESMA data shows hedge funds represent only about 2% of EU AIF net assets, most EU AIF capital is in PE, real estate and “other AIFs.”
• KPMG notes that a Luxembourg fund is “considerably more expensive to set up and maintain” than a Cayman or Singapore fund due to heavier regulation, infrastructure, and local requirements.

For global hedge funds (especially those not focused on EU retail or semi-retail distribution), Cayman generally offers lower cost, faster launch and more flexibility, with Luxembourg often used in parallel if EU passporting is essential.

4.2 Guernsey – strong but smaller scale than Cayman

Guernsey has a sophisticated funds industry:
• Around US$420–520bn in fund assets serviced or domiciled, and roughly 1,300+ schemes and over 1,500 sub-funds.

This is substantial, but compares to:
• Tens of thousands of mutual and private funds in Cayman, and
• Roughly 70% of global hedge fund assets domiciled there.

Guernsey remains a strong niche player (often for PE and infrastructure), but Cayman is on a different scale for hedge funds and digital asset strategies.

5. Why Cayman Remains Superior to the Singapore VCC (and Others) for Hedge Funds

5.1 Global allocator familiarity and track record

Institutional investors: US pensions, endowments, sovereign wealth funds, FoFs, family offices, know Cayman hedge funds inside-out. Surveys consistently show Cayman as the default offshore domicile for non-EU alternative funds, particularly those distributed via private placement.

VCCs, Luxembourg AIFs and Guernsey funds are respected, but for traditional and digital-asset hedge funds, Cayman is the format most investment committees and ODD teams are already comfortable with.

5.2 Tax neutrality and structural flexibility
• 0% corporate and capital-gains tax at the fund level in Cayman, with tax outcomes pushed to investors’ home jurisdictions.
• Wide menu of fund vehicles: exempted companies, segregated portfolio companies (SPCs), ELPs, LLCs, side-pocket mechanics, feeder/master-feeder structures, etc.

Singapore’s VCC offers compelling tax incentives domestically, but 17% corporate tax (subject to exemptions) and mandatory local substance mean it’s optimised for Singapore-centric strategies, not pure global tax neutrality.

5.3 Speed to market and scalable platforms

With a mature regulatory process and a deep bench of specialised service providers, Cayman allows:
• Launch timelines measured in weeks once documents are agreed;
• Efficient use of umbrella SPCs and platforms (such as CV5 Digital SPC) to add new funds, share classes or strategies with marginal incremental cost;
• Straightforward integration with prime brokers, administrators, and digital-asset custody solutions.

By contrast, the VCC ecosystem is still maturing; early adopters reported that VCCs were more time-consuming and costly than expected as the industry learned to service the product.

6. How CV5 Capital Leverages the Cayman Advantage for Managers

At CV5 Capital, we’ve built our entire platform around the strengths of Cayman, particularly for hedge funds and digital asset strategies.

6.1 CV5 Digital SPC – turnkey Cayman hedge fund platform

Managers can launch a dedicated segregated portfolio (“SP”) under CV5 Digital SPC, gaining:
• A proven Cayman umbrella structure with statutory segregation of assets and liabilities;
• High-quality documentation tailored to:
• Long/short equity, macro, quant, credit or multi-strategy;
• Digital-asset and DeFi strategies;
• Master-feeder and parallel structures.
• Ability to serve US and non-US investors, with appropriate feeder/multi-class solutions and coordination on K-1/PFIC needs through tax advisers.

Because the platform is already live and regulated, managers avoid the full burden of a greenfield set-up.

6.2 Cost-efficient, institutional-grade operations

Using CV5’s platform and service-provider stack, managers benefit from:
• Shared infrastructure (legal templates, governance framework, admin relationships, custody integrations), driving down incremental launch costs versus a standalone VCC or Luxembourg AIF.
• Established relationships with top-tier administrators, auditors, banks, custodians and digital-asset service providers — all already comfortable with Cayman hedge fund structures.

The result is a leaner fixed-cost base, vital for emerging managers and new strategies.

6.3 Digital-asset specialism within Cayman

Given Cayman’s leading share of crypto hedge funds, CV5 Digital SPC is built with digital-asset managers in mind:
• Workflow support for on-exchange, OTC and DeFi trading, and custody solutions;
• Documentation and risk frameworks aligned with CIMA expectations for virtual-asset exposure;
• Structures that can accommodate:
• Pure-play crypto hedge funds;
• Tokenised share classes and RWA strategies;
• On-chain NAV and proof-of-reserves integrations over time.

6.4 Governance, compliance and cross-border reach

Through experienced independent directors and governance partners (e.g. Bell Rock), CV5 provides:
• Board-level oversight that meets or exceeds institutional expectations;
• Robust AML/KYC, FATCA/CRS, valuation and risk frameworks;
• Support for managers marketing into Europe, the Middle East and Asia using private-placement regimes, often in combination with feeder or parallel vehicles where needed.

7. Where Cayman, VCC, Luxembourg and Guernsey Each Fit

Putting it all together:
• Cayman – the primary global domicile for hedge funds and digital-asset funds. Neutral, flexible, cost-efficient, and allocator-friendly.
• Singapore VCC – excellent for Singapore/Asia-centric strategies and managers seeking local tax incentives, but with higher minimum scale and tightening governance expectations.
• Luxembourg – the EU gateway, ideal for regulated UCITS/AIFs and retailisation, but more expensive and less focused on classic hedge strategies.
• Guernsey – strong offshore centre for PE and real assets; smaller hedge-fund footprint versus Cayman.

For the vast majority of global hedge funds, and especially for digital-asset hedge funds, Cayman remains objectively superior on scale, familiarity, flexibility and often all-in cost.

Through CV5 SPC and CV5 Digital SPC and our broader platform, CV5 Capital gives managers a fast, institutional-grade way to plug directly into that Cayman advantage and focus on what really matters: generating performance and growing AUM. For more information, contact us: info@cv5capital.io

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