Advantages of Setting Up
a Crypto Fund in Gibraltar

Can you set up a crypto fund in Gibraltar?

Some of the Benefits of Setting Up a Crypto Fund in Gibraltar

Gibraltar is a pioneer in the crypto asset space and the regulation of crypto assets and cryptocurrencies: 

• In 2018, the Gibraltar Financial Services Commission (GFSC) issued a regulatory framework for Distributed Ledger Technology (DLT) Providers, which provides a clear and comprehensive set of rules for companies operating in this space based on 10 Key Principles. The DLT authorisation regime applies to custodians and remitters of other people’s digital value. 
• In addition, Gibraltar was early to implement a business-friendly and efficient Virtual Asset Service Provider (VASP) regime for crypto-crypto and crypto-fiat asset converters as well as token issuing entities (token sales are also known as ICOs, IEOs and IDOs). See our Crypto Asset & DLT services and later article Register as a Virtual Asset Service Provider (VASP) for more info. 
• It is rated as one of the top 3 jurisdictions in the world for crypto asset funds (PWC, Elwood and AIMA – 4th Annual Global Crypto Hedge Fund Report 2022)
  

One of the key advantages of setting up a crypto fund in Gibraltar is the GFSC’s strong track record of regulating financial services and supporting the regulation of crypto asset service providers (CASPs). The GFSC is a well-respected regulator with a long history of protecting investors. This gives investors greater confidence when they are invested in a Gibraltar-based crypto asset fund. There is also crypto fund specific guidance applicable to fund managers and administrators.

Although not directly relevant for funds, it is notable that Gibraltar is the only UK overseas territory that has financial services passporting rights into the UK, which is taken advantage of by a range of insurance, e-money, payments and financial services companies. This attests to the quality of the Gibraltar prudential and supervisory regime.

Gibraltar also implemented a dual funds regime that enables fund managers to opt out of some of the requirements of AIFMD when targeting a global investor base. This is particularly helpful for crypto fund managers where many of the requirements of AIFMD are not fit for purpose in the crypto asset space (such as the depositary obligations).

In addition, Gibraltar is a very business-friendly jurisdiction. The Gibraltar Government has been a staunch supporter of the crypto asset fund sector so long as it is appropriately regulated and Gibraltar has a very favourable attractive and simple tax regime. For example, Gibraltar has a low corporate tax rate of 12.5%  and does not impose capital gains tax on capital growth (including cryptocurrency gains). 

In addition to its favourable regulatory environment and business-friendly policies, Gibraltar also offers a number of other advantages for crypto funds. The country has a highly skilled workforce and professional services providers with expertise in blockchain technology and managing the complexities of international tax and AML/CTF compliance requirements. 

Different types of crypto fund

• closed ended funds where the fund buys early positions in companies and token offerings. This requires the investors to agree to longer hold periods prior to redemption (typically 5-7 years).
• open-ended funds where the fund takes immediately realisable positions in crypto-assets. This allows for daily NAV, subscription and redemptions
• fund of funds: where the fund manager’s primary goal is to find a range of diversified asset allocators that enable the fund to benefit from long, short, algorithmic and derivative trading strategies
• algorithmic high frequency trading funds: these require significant technical resources and are intended to benefit from inefficiencies in the market and early signals that strongly suggest changes in short-term price movement
• decentralised finance (DeFI) focused or NFT focused.

Summary of the benefits of setting up a crypto fund in Gibraltar

If you are considering setting up a crypto fund, Gibraltar should be at the top of your list.

Here is a summary of some of the specific advantages of setting up a crypto fund in Gibraltar:

• Favourable regulatory environment: Gibraltar has a strong track record of regulating financial services, and it was an early mover in creating appropriate regulatory frameworks for crypto asset businesses and the crypto asset fund sector. This approach also helps to ensure that authorised fund administrators comply with international FATF Guidance for AML and CTF.
• Supportive Government: the Government supports the various crypto sectors and has ensured that there are appropriate legal and regulatory frameworks in place.
• Favourable tax regime: Gibraltar does not impose capital gains tax on cryptocurrency gains, which allows managers and entrepreneurs to realise the benefits from crypto asset activities. It also enables crypto asset funds to grow more quickly. 
• Business-friendly jurisdiction: Gibraltar is a very business-friendly jurisdiction. The government is committed to helping good businesses in the sector succeed. 
• Skilled workforce: Gibraltar has a highly skilled workforce with expertise in blockchain technology for employees,  consultants and professional advisors. This is a major advantage for crypto funds, as it allows them to access the talent they need to succeed whilst meeting their compliance and audit requirements.
• Strategic location: Gibraltar is located in a strategic location at the crossroads of Europe, Africa, and the Middle East. 

If you would like to set up a company or fund, Ramparts is an authorised company manager and fund administrator. 

Ramparts is a specialist in crypto asset fund administration (including long only, pure DeFi, algorithmic, derivative trading, private equity closed funds, fund of funds, and high frequency trading funds). 

Ramparts support fund managers and funds having over $300m in NAV. 

Please get in touch to see how we can help.