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1.Define the fund’s terms and investment strategy
2.Determine the appropriate fund structure
3.Prepare a budget for fund establishment and ongoing operational costs
4.Approve the audit cost budget
5.Sign the service agreement and make the initial payment
6.Conduct initial KYC/AML review for the client
7.Finalize the fund’s equity structure and core terms
8.Establish the fund entity and the fund management company
9.Complete the fundraising and subscription documentation
10.Open a fiat bank account
11.Open exchange and custody accounts
12.Register and file the fund management company with relevant authorities
13.Begin accepting subscriptions to the fund

The timeline for establishing a virtual asset fund depends on its structure and subscription method. If the fund accepts only stablecoins, it can be set up in as little as 4 weeks. However, additional steps—such as KYC/AML/KYT/KYW document review, drafting and reviewing fund offering documents, opening fiat bank accounts, setting up exchange and custody accounts, API integration, and transaction testing—may extend the overall timeline.

Net Asset Value (NAV) is calculated by adding the fund’s total assets and subtracting its liabilities to determine the net assets. This amount is then divided by the total number of issued shares to arrive at the NAV per share. Key components in the calculation include detailed fund holdings, accrued income, cash balances, and expenses.

Appointing a fund administrator is strongly recommended for crypto funds due to the complexities of the cryptocurrency market and the specialized operational requirements of these funds. A fund administrator plays a critical role in:

• Calculating Net Asset Value (NAV)
• Managing AML/KYC procedures
• Ensuring KYT compliance
• Handling wallet whitelisting and KYW
• Maintaining fund compliance
• Providing investor services
• Overseeing asset security

Their involvement ensures operational transparency and provides real-time updates to investors and Limited Partners (LPs) on fund performance and security. As the cryptocurrency market continues to evolve, a skilled fund administrator is essential for navigating this dynamic environment, safeguarding fund operations, and enhancing regulatory compliance.

A crypto fund’s Anti-Money Laundering (AML) framework should be comprehensive and tailored to the unique risks of virtual assets. Key components typically include:
1.Customer due diligence (CDD) procedures
2.Transaction monitoring protocols
3.Risk assessment methodologies
4.Record-keeping requirements
5.Staff training programs
6.KYW (Know Your Wallet) and KYT (Know Your Transaction) standards
7.Procedures for reporting suspicious activities to regulatory authorities

Popular structures include:

Given the diversity of strategies in CeFi and DeFi spaces, aligning the fund structure with the investment approach is essential for navigating complex regulatory environments effectively.

In line with industry best practices, crypto VC funds should issue investor reports that comply with ILPA (Institutional Limited Partners Association) standards. These typically include:

• NAV (Net Asset Value) reports

• Quarterly financial statements

• Capital call notices

• Capital call confirmations

• Capital account statements

• Annual financial statements

Yes, most fund jurisdictions allow crypto funds to accept subscriptions in stablecoins. However, to ensure compliance with AML and KYC protocols, funds must implement:

• Robust AML procedures

• Wallet whitelisting protocols

• KYT (Know Your Transaction) systems

• Comprehensive risk assessments

It is essential to consult with a legal advisor to confirm that your fund structure supports stablecoin subscriptions. Since regulations vary across jurisdictions, legal guidance is critical to ensure full compliance with local laws and regulatory requirements.

Crypto funds must implement a comprehensive Anti-Money Laundering (AML) framework to mitigate financial crime and ensure regulatory compliance. Key components of AML procedures include:

By adopting thorough KYC/AML checks and utilizing wallet whitelisting for verification, crypto funds can significantly reduce the risk of illicit activity and regulatory breaches. A strong AML framework is essential for maintaining investor trust and safeguarding the integrity of fund operations.

In the crypto fund space, open-ended funds (e.g. a crypto hedge fund) typically report Net Asset Value (NAV) on a monthly basis, while primary market funds tend to do so quarterly.
However, reporting frequency can vary significantly depending on the fund’s investment strategy, investor requirements, and operational preferences.
Some funds may opt for more frequent reporting—such as daily, weekly, bi-weekly, or bi-monthly—while others may choose semi-annual or annual reporting cycles.