A cryptocurrency hedge fund
is a type of investment fund that pools capital for a number of investors and then directs it to a particular type of assets, cryptocurrencies. The focus can be partial or entirely on digital currencies as well as other decentralized digital assets.
In order to open a cryptocurrency hedge fund in Germany, investors will need to follow the steps for fund incorporation as well as arrange for the active management of the fund by a team of fund managers and experts.
German funds can be structured as a limited partnership, however, this is not the only option for investors and our team of agents can help entrepreneurs with company registration in Germany
for the purpose of fund domiciliation.
Hedge funds are included in the open-ended retail funds category, as per the German Capital Investment Code. The German Federal Financial Services Supervisory Authority is the one that regulates funds in the country.
Cryptocurrency Hedge Funds
A cryptocurrency hedge fund in Germany will typically rely both on manual fund diversification strategies as well as automated ones, such as quantitative trading software. A characteristic of this type of fund is that investors who follow the strategies and principles used for hedge funds will attempt to reduce the investment risks and the volatility that is present on the cryptocurrency market.
Investors can choose to open a hedge fund that specializes exclusively in digital currencies or they can increase the exposure of an existing hedge fund to cryptocurrency assets.
A cryptocurrency hedge fund based in Germany can offer its services to high-net-worth individuals as well as asset managers and it can also provide corporate services as part of a separate category of activities. Over the counter cryptocurrency trading can be an example of an additional service.
Some of the main issues that need to be taken into consideration when starting this type of fund, apart from company formation in Germany, are the following:
- - the crypto assets: these can be well-known cryptocurrencies such as Bitcoin or Ether and Ripple as well as others;
- - cryptocurrency tokens: these are only used by some hedge funds and they work as a medium of exchange within certain limitations;
- - regulatory regime: Germany does not have a clear law in place for cryptocurrencies; certain Government guidelines and publications have been issued on this topic.
- - strategy: the fund manager will need to develop an investment strategy, for example a quantitative one.
Investors can contact our agents who specialize in German company formation
to find out how they can start their business plan, beginning with the creation of an investment vehicle.
Basic information about fund creation in Germany
Investment funds can be structured as a limited liability partnership in Germany, for the benefit of investors who will only be liable up to a certain amount. Our team of agents who specialize in company registration in Germany can provide investors with complete details about the formation of a limited liability partnership as well as the taxation regime.
Investors who open a hedge fund in Germany will need to take the following into consideration:
- Form: the limited liability partnership is the typical form, along with the investment stock corporation or a contractual fund; our German company formation agents can offer details.
- Reporting: the general reporting requirements can include an annual report and a semi-annual one in some cases.
- Regulator: the German Federal Financial Services Supervisory Authority (BaFin) is in charge of regulating funds and is also involved in the regulation of cryptocurrencies, when applicable.
- Taxation: the tax treatment of investment funds is set forth in the Investment Tax Act; some funds can be privileged and exempt from corporate income tax and trade tax.
Investment funds based in Germany are most often managed by a fund manager based in the country.
General overview of net assets in the investment funds market in Germany
According to a general market overview for the investment funds and asset management markets, we present the following statistics:
- - net assets in open-ended retail funds: 377,434 for equity funds and 206,831 for bond funds (in million euros).
- - net assets in million euros managed in securities and private equity funds: 1,623,767.
- - total open-ended funds net assets in millions of euros: 2,769,677.
The data was collected at the end of March 2019.
For complete information about cryptocurrency hedge funds in Germany
as well as the regime for investment products, we invite entrepreneurs to contact
our team who specializes in company formation in Germany