Alternative Investment Fund in Estonia for investing in crypto projects and crypto-assets

Alternative Investment Fund in Estonia for investing in crypto projects and crypto-assets. How does it differ from investment funds in other countries?

Alternative Investment Fund in Estonia for investing in crypto projects and crypto-assets
Alternative Investment Fund in Estonia for investing in crypto projects and crypto-assets

Investment Funds in Estonia are structures that allow you to attract money from prospective partners (investors) and use it to pursue a pre-determined investment goal. So if you have a great idea for an investment venture, setting up an Investment Fund in Estonia might be an interesting solution for you.

An example of an investment structure is an Alternative Investment Fund (AIF) registered in the Republic of Estonia.

How Alternative Investment Funds in Estonia differ from Investment Funds in other countries?

First of all, the Republic of Estonia was one of the few countries that introduced a relatively simple mechanism for registering a structure to collect funds from partners (investors).

Comparing the requirements of the Estonian legal system for an Investment Fund with those of other European countries and the United Kingdom, the Estonian solution is much simpler in terms of regulation, cheaper for setting up and requires less effort to obtain the appropriate authorisations, licenses and permits.

Alternative Investment Fund in Estonia (AIF) | Registration
Small Alternative Investment Fund (AIF). The legal environment of the Republic of Estonia provides with the possibility of organising the collection and attraction of investments and further management of collective assets under the simplified regulation of small alternative investment funds.

What assets can be managed by the Manager (Management Company) of the Alternative Investment Fund in Estonia?

The Manager of the Alternative Investment Fund in Estonia can manage total assets of up to 500 million euros. The registration of the management company takes between 30 and 120 days depending on the exact case, personalities, professional background and experience of the Board Members, Portfolio Managers and other persons included to the Senior Management. Most importantly, the AIF in Estonia can hold assets in virtual currencies in its investment portfolio, so it can invest in cryptocurrencies and crypto projects.

A Fund Manager has the right to manage several funds with the same of different assets and strategies, but the total assets of the managed funds may not exceed €100 million, or in the case when the investments are made for long periods of time (from 5 years or more) and no financial leverage (debt ratio) is used, the total assets of the funds may reach €500 million.

The Estonian Financial Supervisory Authority (FSA) is one of the few in Europe that accepts investment strategies (properly documented) based on investing funds in cryptocurrencies. As a result, the Alternative Investment Fund in Estonia opens up opportunities for funds that were previously unable to generate profits from investments in such instruments.

In addition to cryptocurrencies, the Alternative Investment Fund in Estonia can also invest its funds in "classic" investment products such as real estate, shares, derivatives, and other investment assets. But it is recommended that Managers separate their "classic" strategies with the strategies based on investing in digital assets.

The undisputed advantage of the Alternative Investment Fund in Estonia is the much simpler registration procedure and authorisation, and the possibility to invest in cryptocurrencies compared to other European countries.
Registration of Management Companies & Funds | AlphaLAW
Over the time, any asset manager who does more than plan to manage own assets faces the problem of a transparent and convenient management infrastructure.

The necessary structure that must be prepared for the registration of Alternative Investment Fund in Estonia

For the operation of the Alternative Investment Fund in Estonia, two legal entities must be registered in the Commercial Register of the Republic of Estonia:

  • First step, a limited liability company (OÜ) must be established, which will act as the Fund Manager (Management Company). In some cases, the Management Company must obtain an AML license for activities covered by the Money Laundering and Terrorist Financing Prevention Act (MLTFPA).
  • The second step is to obtain an authorisation / a license from the Estonian Financial Supervisory Authority (FSA).
  • Third step is to establish a Limited Partnership Fund (LPF) under the management of the Management Company.
Registering an AIF in Estonia is a process that requires expertise and proper guidance.

Due to a number of advantages associated with choosing Estonia as an investment location, it is definitely worth considering this country as a potential location for the AIF. The transparency of regulations and the guaranteed stability of the legal and economic system make Estonia a great alternative to other "trendier" European jurisdictions.

If you have ever considered Estonia as a potential location for your "classic" investment activities, be sure that such investment structure will allow you to develop your investment skills in the cryptocurrency space as well.

Contact Us

AlphaLAW team consists of specialists who have experience in capital management and understand the specifics of capital management. Our experienced team takes care of all issues, from setting up the structure of the management company (the Fund Manager), its registration with the Financial Supervision Authority (FSA), drafting the AIF prospectus, preparing all necessary documents, filing and defending the prospectus with the FSA to registering the LPF in Estonian Commercial Register (Äriregister). Upon additional agreement, we also provide FULL support of funds in their day-to-day business after registration.