Crypto Hedge Fund Platform FAQ


Why would I launch my fund in the Cayman Islands?

The Cayman Islands is the world's leading jurisdiction for hedge funds and the leading domicile for digital asset funds, well regarded by investors, particularly institutional investors, a British Overseas Territory with a stable government and commercially friendly laws and regulations.


Why launch via CV5 Digital instead of setting up a stand-alone fund?

We have experienced over the years that a stand-alone fund requires significant up front legal cost and expense. Added to this is the extensive time it takes on structuring, due diligence on service providers, compliance and on-boarding with multiple service providers. This can often lead to variables such as the market moving dramatically or investors allocating capital elsewhere. Over the last few years, the cost of operating a fund has increased substantially due to increased compliance and regulatory burden.

With CV5 Digital, you get to leverage our expertise, the heavy-lifting that we have already done and the expense reduction based on economies of scale. This enables you to benefit from significantly reduced upfront cost, reduced total expense ratio (TER) and on-going support from CV5 Capital - so you can focus on:


  1. Managing your investment strategy

  2. Raising capital

  3. Your investors

  4. Building an audited track record

Will my fund be regulated?

Yes - Your fund will be regulated under section 4(3) of the Mutual Funds Act (As amended) with the Cayman Islands Monetary Authority ( CIMA). This will provide comfort to investors and regulators.


Does CV5 Digital have a Legal Entity Identifier (LEI)?

Yes: 984500137 A89X9H83F21


Does the regulator have an approval process and if so, what is the time frame?

There is no approval process so once your fund is on-boarded and we have registered it via the CV5 Digital platform, you can immediately begin trading.


What tax rate will my fund be subject to?

The tax rate in the Cayman Islands is Zero. There are no taxes.


What is the time-frame to launch a fund on CV5 Digital?

Approximately 4 weeks


Can I launch and manage a range of different funds on the platform?

Yes - You can launch one fund or a range of funds. We are working with managers who wish to have funds focused on single digital assets such as a buy and hold Bitcoin and/ or Ethereum fund, index tracking funds or a Igo arbitrage funds trading multiple digital asset securities. The option to launch additional funds is straight forward.


What is the minimum investment amount I can provide to my investors?

USD 100,000. Each investor must subscribe for shares in your fund at USDl00,000 or equivalent in other currencies.


What leverage can I use?

You may use any amount of leverage.


Can I use derivatives?

Yes - there is no restriction on the use of derivatives.


Can my investors subscribe in Bitcoin or Ethereum?

Yes.


Can I select the exchanges to trade with?

Yes - we have APl's with most crypto exchanges. You may trade with any exchange you wish.


Any restriction on investment strategy or digital assets traded?

No. However, please inform us in as much detail in the fund terms questionnaire as to the strategy and digital assets to be traded. It is important that we can value the assets independently and understand the volume of trading that is to take place.


What fees can I charge as the fund manager?

Any. Typically, the fees charged by traditional hedge funds are a management fee of 2% and a performance fee of 20%. However, it is entirely at your discretion what fees you charge.


Can my fund pay dividends?

Yes - you can have your fund or fund range pay dividends. Please note that dividends may only be paid from 'profits' of the fund however and not from capital.


How often can my customers invest into the fund?

You can elect for investors to subscribe Monthly, Quarterly or Annually. Most are Monthly.


How often can my customers sell their shares in the fund?

You can elect for investors to subscribe Monthly, Quarterly or Annually. Most are Monthly.


Can I prevent my customers from selling their shares for a period of time once they invest?

Yes - you can set a lock-up. This can either be a hard lock-up where it is stated in your prospectus that there will be no redemptions for a certain period e.g. 1 year. Or, you can have a soft-lock-up whereby an early redemption penalty will apply if an investors wishes to redeem within a certain time-frame, such as 1 year.


Will I receive an ISIN, CUSIP and Bloomberg Codes?

Yes. These will be provided.


Who is the Platform Manager?

CV5 Capital is responsible for managing the platform from a compliance, governance and risk management perspective. CV5 Capital is based in the Cayman Islands and a registered person manager under the Securities Investment Business Act (As Amended).


Who is the Fund administrator?

An independent fund administrator who calculates the Net Asset Value (NAV) and acts as the transfer and paying agent.


Is my fund audited?

Yes - each and every fund is audited by a CIMA approved audit firm. This provides comfort to investors and regulators whilst also enhancing each fund managers operations by providing an audited track record. All funds are audited annually and audited financial statements are filed with CIMA within 6 months after the financial year end.


Is my fund segregated from other funds on the platform?

Yes - all funds are legally segregated from each other so there is no cross-liability.


Can one of my funds on the CV5 Digital invest into other funds on the CV5 Digital Platform?

Yes - provided it is at fair market value.


Will my fund have a bank account?

Yes


Can I invest in other assets other than digital assets?

Yes


Any restrictions on the location of my investors?

No - However, if there are us investors then it is likely that we will form a us Master fund to keep us taxable investors separate from no-US taxable investors.


What investor reporting is there?

We can configure investor reporting using technology that provides a secure portal for investors to see their holdings in your fund or funds in real time. The client portal also provides investors with fact sheets and other documentation, as stipulated by you. This is an addition to periodic investor reporting.


Who will be the directors and what role do they play?

The directors each have over 20 years of senior level industry experience in the asset management industry in addition to a number of years in digital asset funds, crypto technology, blockchain and operations.


What regulatory reporting is there?

The Platform Manager, CV5 Capital, attends to all regulatory reporting on behalf of your fund on a periodic basis.


Do I, as the fund manager, need to be regulated?

No - an overseas fund manager can provide services to a Cayman Islands investment fund and there is no requirement for the overseas fund manager to be licensed by or registered with CIMA unless that fund manager establishes itself in the Cayman Islands. If you currently do not have an investment management entity, then we can advise on this so please contact us.


Can I launch a venture capital fund that invests in blockchain technology?

Yes. You can launch either an open-ended fund that invests in liquid digital assets and/or a closed-ended venture capital or private equity fund.


Do I need to have a minimum amount of investor capital at launch?

There is no minimum assets under management requirement. However, it is important that the minimum fees and running cost of your fund are met. The higher the AUM, the lower the total expense ratio will be.


What will the name of my fund be?

This is entirely your decision. The legal name will be prefaced by ''CV5 Digital SPC obo Your Fund SP'' - for the purposes of marketing and branding, you can simply use your proposed fund name.


What legal documentation will I be provided with?

You will be provided with the following:


  • Base Prospectus

  • Supplemental Prospectus

  • Subscription Agreement

  • Investment Management Agreement

  • Investment Advisory Agreement

  • Launch Resolutions

I am ready to launch a digital asset fund, what are the next steps?

We will walk you through the entire process when you are ready and answer any additional questions.


Please contact us: info@cv5capital.io


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