LKS Consult – Practice areas – Financial Licenses in Estonia – Cryptocurrency Investment Fund

Cryptocurrency Investment Fund

An Alternative Investment Fund is a legal entity or a pool of assets that includes the capital of a number of investors for the purpose of investing it in accordance with a specific investment policy of the fund in the interests of the respective investors and in their common interests. The fund must have a Fund Manager. The Investment Funds Act regulates the creation, establishment, and management of investment funds.

Basic Definitions

A cryptocurrency investment fund consists of two legal entities:

  • 1. Fund Manager – OÜ

    The Fund Manager is a company which main and permanent activity is the management of one or more funds. The Fund Manager can manage a fund created or established in accordance with the Investment Funds Act. In order to work as a Fund Manager, a person must be licensed to operate and register their activities with the Money Laundering Data Unit (FIU) with the provisions of Part 5 of the Investment Funds Act.

  • 2. Limited Partnership Fund (LPF) – Limited Partnership

Participants of the Limited Partnership Fund are at least one full member (General Partner), which is the Fund Manager, and at least one investor (Limited Partner).

It is not necessary to register an investor (Limited Partner) when the fund is initially established.

A Limited Partnership Fund is a foundation established as a Limited Partnership in accordance with the Investment Funds Act, and the provisions of the Commercial Code of the Republic of Estonia apply to its establishment, operation, and liquidation.

The Limited Partnership Fund can manage its property or enter into a Management Agreement with the Fund Manager. Only a Fund Manager who is licensed to operate under the Investment Funds Act can act as a Limited Manager of a Limited Partnership Fund or a General Partner of a Limited Partnership Fund that manages its own assets.

Possibilities of Alternative Investment Fund

An Alternative Investment Fund (AIF) is the most convenient structure for collective investment, in which investors’ assets are attracted for the purpose of their further use and placement in their interests in accordance with a predetermined investment policy under the guidance of the company that managed the fund. You can invest in the fund in cryptocurrency.

An Alternative Investment Fund is the best solution for making collective venture capital investments and organising investor funds in stocks, bonds, commodity indices, derivatives, currencies, cryptocurrencies, real estate, and other financial assets.

The prices of different asset classes often move in different directions, whereby investments in different types of assets can stabilise the overall investment.

In addition, the fund can invest in publicly listed companies and private equity companies and portfolios, as well as in listed companies. Investments can be made around the world without adhering to a specific principle of global distribution. Derivative instruments can be used to achieve investment goals or to mitigate risks.

A Fund Manager usually invests in short-term bonds issued by governments or companies in order to achieve risk-free revenue. In order to achieve higher revenue, the Fund Manager usually takes derivative positions (mainly in the form of futures and forward contracts) on indices or individual instruments in the stock, bond, currencies, and commodity markets. Futures and forward positions can be “long” (that is, making money in a rising market and losing in a falling market) or “short” (making money in a falling market and losing in a rising market).

The value of investing in a fund can sometimes be negative: fund investors take on the risk that as a result of the investment they may receive a smaller amount than was originally invested.

Before making an investment decision, investors should take into account that neither the profitability for previous periods, nor the history of the fund/management company until now, guarantee profit and does not serve as an indicator of profitability in subsequent periods.

Benefits of Alternative Investment Fund

For the founders of the fund:

  • The total investment in the fund can be up to 100 million euros.
  • The term for creating an investment fund starts from 2 months.

For investors:

  • No minimum investment threshold.
  • The possibility of investing in cryptocurrency.

Cost of Creating a Cryptocurrency Fund

At the initial stage, the specialists of LKS Consult OÜ recommend drawing up a Legal Opinion of your project, analysing the business model for compliance with your project with the structure of an Alternative Investment Fund.

The term for creating a Cryptocurrency Fund starts from 2 months.

The team of experts of LKS Consult OÜ is happy to accompany your project in the necessary procedures for the preparation of documents and obtaining a license for an Alternative Investment Fund in Estonia.

An individual approach is important for us, and we take care of the needs of your business. LKS Consult OÜ provides continuous support to entrepreneurs in accordance with the latest innovations in Estonian legislation at all stages of the company’s development.



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