Tokenized Funds

Experience

Consulted client in connection to setting-up alternative hybrid structures and tokenized real estate lending “master feeder” fund (US/Cayman)

Advised client on potential issuance of fund tokens and their possible effect on an existing LP structure

Consulted fund manager on setting up a SPV for the tokenization of a LP interest in a venture capital fund, including advising on structure’s classification for purposes of US and Cayman securities regulations

We assist in all aspects of the tokenized funds’ formation, governance and operation.

Including:

  • Defining the fund structure, strategy and associated risks;
  • Preparing private offering memorandums, operating agreements, partnership agreements, investment advisory agreements, investment management agreements and other documentation for the fund’s launch and operation;
  • Preparing and filing Form D with SEC and submitting “blue sky” state filings, if required;
  • Review of marketing materials and advise on marketing of private equity and venture capital funds;
  • Advising on foreign and US investor qualifications;
  • Advising on AML/KYC compliance;
  • If necessary, guiding through SEC and state registrations;
  • Advising on applicability of federal and state regulations, including broker-dealer legislation, FINRA rules, the Investment Advisers Act of 1940 and the Investment Company Act of 1940;
  • Establishing offshore feeders for foreign investments;
  • Supervising offshore attorneys, fund administrators and auditors;
  • Advising in relationships with brokers, custodians and other service providers.

Services Related to Formation and Operation of Tokenized Funds

Tokenized funds offer a number of potential benefits as compared to traditional funds.

Benefits include:

  • Access to a global pool of capital;
  • Increased liquidity;
  • Simplified digital management of significant number of investors via smart contracts;
  • Automated and transparent governance, voting and compliance using smart contracts on blockchain;
  • Prompt cryptocurrency operations as an alternative to banking transactions in fiat.

Our fund tokenization services include:

  • Developing a fund’s strategy and structure;
  • Possible integration of the token issuer into the current structures or creation of a separate tokenized structure for existing manager;
  • Advising on jurisdiction and cross-jurisdictional issues;
  • Implementing the chosen trust structure and preparing all the necessary documentation;
  • Preparing private offering memorandum and subscription documents;
  • Advising on foreign and US investor qualifications;
  • Advising on AML/KYC compliance.

Fund token issuers must structure each offering very carefully to take into account various pitfalls presented by securities regulations, AML/KYC requirements and current investment and governance restrictions. Heightened global liquidity may present additional operational complications, for example, with secondary market re-sales and maintaining capitalization tables.

Some of the other major considerations that should be acknowledged and addressed by emerging tokenized fund managers are that security tokens may by subject to limitations on re-sale, number of investors, investor solicitation and acceptance, tradability on secondary markets in the US and foreign jurisdictions, etc.

We help our clients efficiently navigate the web of challenges arising throughout formation, governance and operation of tokenized funds.

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