A practical guide to a digital-asset fund Singapore

Two jurisdictions. One fund. The question every manager faces when structuring a digital-asset vehicle across Hong Kong and Singapore is deceptively simple: which regulator governs, which law applies to the fund documents, and what does each licensing window actually require? The answer turns on how the fund is assembled – not on where the manager happens to sit.

A digital-asset fund structured through Hong Kong and Singapore typically pairs a Cayman Islands or BVI holding or fund entity with a licensed or exempt manager in one or both financial centres, subject to the Securities and Futures Ordinance and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance in Hong Kong, and to the corresponding Monetary Authority of Singapore regime in Singapore. The centre of gravity for regulatory exposure – and therefore the licensing answer – is determined by where investment management activities are conducted, where investors are solicited, and whether the assets meet the definition of "securities" or "futures contracts" under the applicable law. Since the Hong Kong VATP licensing regime (mandatory licensing for centralised virtual-asset trading platforms) commenced 1 June 2023, and the Pillar Two rules took effect for fiscal years beginning on or after 1 January 2025, the structural decisions carry material legal consequence that earlier fund cycles did not face.

This guide walks through the decision the manager faces, the sequence in order, the gate at each step, and the mistakes that cause structures to stall or attract regulatory scrutiny.

What decision are you actually making – and why the sequencing matters

The first question is not "Hong Kong or Singapore?" It is "what does the fund do, and who will it do it for?" Those two answers determine every subsequent licensing and structural choice.

A fund that trades tokenised securities, digital tokens that are classified as "securities" or "futures contracts" under Hong Kong law, operates inside the Securities and Futures Ordinance perimeter from the moment management activity takes place in Hong Kong. A fund that trades non-securities virtual assets – typically spot crypto – sits instead under the VATP regime if it operates a centralised platform, or potentially under no Hong Kong licence at all if it is a pure closed-ended vehicle managed by a licensed entity elsewhere. The category matters, and the category can change as a portfolio evolves.

Singapore runs a parallel analysis. The Monetary Authority of Singapore applies a similar securities/non-securities distinction. A manager conducting fund management from Singapore requires a Capital Markets Services licence unless an exemption applies; dealing in digital payment tokens has its own licence category under the Payment Services Act. These are not interchangeable: a manager licensed in one category cannot assume coverage in the other.

What follows from this? The sequencing decision – which entity sits where, which entity holds the licence, which entity manages assets – must be made before the constitutional documents are drafted, not after. In our cross-border practice, the most expensive restructuring we see is the one done eighteen months in, when a manager discovers that the entity conducting management activity is not the entity that holds (or applied for) the licence.

How do you map the regulatory perimeter before choosing the structure?

Mapping the perimeter is a legal analysis exercise, not a compliance box-tick. It requires three inputs: the asset taxonomy, the investor profile, and the management-activity location.

Start with the asset taxonomy. List every asset class the fund intends to hold or trade. For each, answer: is this a "security" or "futures contract" under Hong Kong law? Under Singapore law? The answers can diverge – a staking receipt may be treated differently across the two systems. Where the answers diverge, the structure must accommodate both positions simultaneously, not choose one and ignore the other.

Next, the investor profile. Hong Kong's regulatory perimeter for asset management turns partly on whether the fund is offered to "professional investors" as defined. Singapore uses a broadly comparable professional-investor concept. Restricting the fund to professional investors does not eliminate the licensing obligation, but it materially affects the conduct obligations and the disclosure requirements that attach to it. A fund marketed to retail participants in either jurisdiction faces a substantially heavier compliance burden.

Then, management-activity location. Where do portfolio decisions get made? Where are the risk systems operated? Where do the portfolio managers sit? Regulators in both jurisdictions apply a substance test, not a registration test. An entity registered in Singapore but managed entirely from Hong Kong may find itself subject to Hong Kong Securities and Futures Commission oversight regardless of where the legal entity was formed.

The perimeter map answers the question: "which licences do we need, in which jurisdictions, and in which entities?" Only then does the structural design phase begin. Counsel on our desk regularly advises on this mapping exercise as a stand-alone first engagement, before the manager has committed to any particular structure.

Step 1 – Choose the fund-entity and management-entity architecture

The standard architecture for a digital-asset fund with both Hong Kong and Singapore connections places the fund entity (the vehicle that issues interests to investors) in a neutral offshore centre – typically the Cayman Islands or the BVI – while one or two licensed management entities sit in Hong Kong, Singapore, or both. This architecture separates the fund's legal identity from the regulatory identity of the manager, which simplifies licensing, succession and cross-border enforcement questions.

A Cayman Islands open-ended fund registered as a mutual fund (Cayman Islands Mutual Funds Act governs) is the most commonly used structure for liquid digital-asset strategies. A Cayman Islands limited partnership or a BVI limited partnership is more common for illiquid or venture-style digital-asset strategies. Both are well-recognised by institutional investors and their legal and compliance teams.

The management entity question is where the Hong Kong/Singapore split arises. Three configurations are common.

First, a single Hong Kong licensed entity manages all assets and the Singapore connection is limited to investor relations or marketing – in which case the Singapore marketing-related activity requires its own regulatory analysis but does not necessarily require a separate Singapore licence.

Second, a single Singapore licensed entity manages all assets and the Hong Kong connection is limited to a representative or sub-adviser – which requires careful analysis of whether that Hong Kong activity triggers an obligation to hold a Hong Kong licence.

Third, parallel licensed entities in both jurisdictions, each responsible for specific assets or sub-funds. This is the most structurally resilient option but also the most operationally complex and the most expensive to maintain. It is most appropriate where the fund genuinely conducts substantive management activity in both financial centres.

The gate at this step: before committing to any configuration, obtain a written legal position on whether the proposed management activity in each jurisdiction triggers a licence obligation. Do not rely on the assumption that offshore registration eliminates onshore regulatory obligations.

Step 2 – Determine the licensing route in each jurisdiction

In Hong Kong, a fund management entity that manages a fund investing in assets that are "securities" or "futures contracts" requires a licence under the Securities and Futures Ordinance – Type 9 regulated activity (asset management). Where the fund operates a centralised virtual-asset trading platform, separate VATP licensing under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance applies, with the Securities and Futures Commission (the SFC, Hong Kong's securities regulator) as the licensing authority. The two regimes can overlap: a platform that also manages a fund may need both. The VATP mandatory licensing regime commenced 1 June 2023; any operator providing services after that date without a licence or a transitional arrangement is exposed.

The SFC also applies conduct-of-business requirements, investor suitability obligations and ongoing disclosure requirements. For digital-asset-specific guidance, the SFC has issued circulars setting out its position on the management and offering of virtual-asset portfolios – these are live documents and should be checked against the current SFC website before any application is submitted.

In Singapore, a fund manager requires a Capital Markets Services licence for fund management. The Monetary Authority of Singapore grants an exemption for certain smaller managers (the registered fund management company category) with restrictions on assets under management and the number of qualified investors. A manager dealing in digital payment tokens requires a separate licence under the Payment Services Act. Singapore's licensing process involves a fitness-and-propriety assessment, an evaluation of the applicant's systems and controls, and a review of the proposed fund structure and investor base.

The gate at this step: submit licence applications in the correct sequence. In our cross-border practice, a common mistake is submitting the Singapore application before the Hong Kong analysis is complete – then discovering that the proposed management structure conflicts with the Hong Kong position. The two applications should be prepared concurrently and cross-checked before either is filed.

Step 3 – Establish AML/KYC and travel-rule compliance before launch

AML compliance for a digital-asset fund is not a post-launch checkbox. In Hong Kong, the Anti-Money Laundering and Counter-Terrorist Financing Ordinance imposes customer due diligence obligations on licensed entities and, specifically for VATPs, the FATF travel rule (the Financial Action Task Force standard requiring originator and beneficiary information to travel with virtual-asset transfers). Singapore applies an equivalent travel-rule requirement under its own AML framework.

For a fund structured across both jurisdictions, the AML programme must be designed to satisfy both regimes simultaneously. The key practical challenges are three.

First, investor onboarding. The fund must conduct CDD (customer due diligence) on every investor. For institutional investors this means entity-level and UBO (ultimate beneficial owner) verification. For digital-asset funds with complex investor structures – family offices holding through multiple layers, investors in high-risk jurisdictions, politically exposed persons – the CDD file must be built to a standard that satisfies both the SFC's and MAS's current guidelines. A file that satisfies Singapore but not Hong Kong will become a problem the moment the Hong Kong licensed entity is examined.

Second, transaction monitoring. Blockchain transactions are traceable, which is an advantage – and a disclosure obligation. A fund that receives investments in virtual assets must screen the source wallets. A fund that distributes proceeds in virtual assets must apply the travel rule to those transfers. The system capable of doing this at fund launch is not the same as a standard fiat-fund AML system; it requires blockchain analytics capability integrated into the compliance workflow.

Third, sanctions screening. Hong Kong implements United Nations sanctions and does not give domestic effect to unilateral measures of other states. Singapore applies a comparable United Nations-based framework with its own designated-person lists. A fund with investors or counterparties from jurisdictions subject to UN measures must screen against both lists as a baseline. The compliance programme must document this screening and make it reproducible for regulatory review.

The gate at this step: the AML programme, including the travel-rule procedure and the sanctions-screening workflow, must be documented and operational before the first investor is onboarded. A regulator examining a fund that launched without a compliant AML framework will not accept "we were building it" as a response.

Step 4 – Draft constitutional documents and investor disclosures for a dual-jurisdiction fund

The constitutional documents of a Cayman Islands fund are governed by Cayman Islands law. The management agreement between the fund and the Hong Kong or Singapore management entity is typically governed by the law of the management entity's jurisdiction – Hong Kong law or Singapore law. The investor subscription agreement, and critically the private placement memorandum (the main disclosure document offered to investors), must be drafted to address the regulatory requirements of every jurisdiction in which the fund is marketed.

This is where the dual-jurisdiction structure produces genuine drafting complexity. The private placement memorandum must carry a Hong Kong regulatory disclosure if the fund is offered in Hong Kong; a Singapore regulatory disclosure if offered in Singapore; and, where professional-investor exemptions are relied upon, the precise language required by each regulator's guidance. A document that satisfies one jurisdiction's requirements but not the other is a liability in the hands of every investor who receives it.

The management agreement must also be consistent with the manager's licensing obligations. If the Hong Kong licensed entity is the investment manager of record, the agreement must reflect that – and the fee arrangements, delegation provisions and regulatory-reporting obligations must be set out in a way that the SFC can examine and understand. Vague delegation chains are a consistent source of regulatory concern in our experience.

A note on intellectual property and data agreements: where a digital-asset fund uses algorithmic strategies, the treatment of the underlying code, data inputs and API agreements is a legal question with cross-border implications. Further detail on cross-border data and technology agreements in the Asia-Pacific context is addressed in our analysis of cross-border SaaS and data agreements touching Singapore and in the companion piece on data transfer and privacy terms for Asia-facing platforms.

The gate at this step: have every material document reviewed against the current regulatory position in both jurisdictions before distribution. Regulations in this space move quickly; a document prepared to last year's standard may not satisfy the current regulatory guidance.

What do foreign managers most commonly get wrong?

The most consistent mistake we see from managers coming from European or US fund markets is the assumption that an offshore fund vehicle – a Cayman fund, say – insulates the management entity from local regulatory requirements in Hong Kong or Singapore. It does not.

The regulatory test in both jurisdictions is activity-based, not entity-based. A Cayman-registered management company whose staff sit in Hong Kong making portfolio decisions is conducting regulated activity in Hong Kong. The fact that the entity is incorporated elsewhere is irrelevant to the licensing analysis. We have advised on a number of situations where a manager has operated for twelve to eighteen months on the assumption that its Cayman registration provided the necessary licence – and discovered, typically at the point of a compliance review or an investor due-diligence questionnaire, that it did not.

A second common mistake is treating the Hong Kong VATP regime and the Type 9 licence as alternatives. They are not. A manager that operates a centralised virtual-asset trading platform and also manages a fund may need both – and the obligations differ. Failing to hold the correct licence exposes the entity, and potentially its directors and officers, to regulatory action.

A third mistake: under-investing in the AML infrastructure at launch. The travel-rule obligation and the blockchain-analytics requirement are not optional features of a digital-asset fund's compliance programme. They are baseline requirements that regulators in both Hong Kong and Singapore expect to see from day one. A fund that launches with a fiat-fund AML template and promises to upgrade later is starting with a structural compliance deficit.

For managers already in operation who have concerns about whether their current structure is correctly positioned, a second-opinion review – mapping the actual management-activity footprint against the licensing position – is a productive first step. If an earlier filing, structure or compliance approach produced a stalled or adverse result, a structured review can identify the gaps and the routes still open.

Write to us at info@lockhartyip.com to discuss how a review of your current position would be structured.

Decision checklist: before you launch

The following checklist reflects the sequence above. Each item is a gate. A fund that cannot answer each question affirmatively before launch carries an identifiable regulatory risk.

Asset taxonomy completed and classified under both Hong Kong and Singapore law – confirming which assets are "securities" or "futures contracts" and which are not.
Investor profile confirmed – professional investors only, or broader – and the applicable exemptions identified in each jurisdiction.
Management-activity location mapped – confirming where portfolio decisions are made and which entity makes them.
Licence applications submitted or exemptions confirmed in each jurisdiction where management activity occurs – Type 9 and/or VATP in Hong Kong; Capital Markets Services and/or Payment Services Act in Singapore.
AML programme documented and operational – including CDD procedures, travel-rule workflow, blockchain analytics capability and UN sanctions screening in both jurisdictions.
Constitutional documents and private placement memorandum drafted and reviewed against current regulatory guidance in both jurisdictions.
Management agreement consistent with the licensing position of the management entity of record.
Data and technology agreements reviewed for cross-border legal exposure.
Pillar Two analysis completed for any in-scope MNE group whose fiscal year begins on or after 1 January 2025.
Regulatory-reporting obligations identified and calendar set in both jurisdictions.

This checklist does not replace legal advice. Each item is a question that requires a considered, jurisdiction-specific answer. Parties should verify the current regulatory position before acting, particularly on licensing requirements and AML obligations, which are subject to ongoing regulatory development in both Hong Kong and Singapore.

For a structured assessment of your fund's licensing and AML position across Hong Kong and Singapore, write to us at info@lockhartyip.com.

For a fuller overview of our technology and Web3 practice, including the cross-border regulatory work we undertake across Hong Kong, Singapore and the principal offshore centres, see our Tech & Web3 practice page.

Common questions about a digital-asset fund structured through Hong Kong and Singapore

What is the first step in a digital-asset fund structured through Hong Kong and Singapore?

The first step is a regulatory-perimeter analysis: classify every intended asset under both Hong Kong and Singapore law, map where management activity will occur, and determine which licences are required in each jurisdiction before any entity is incorporated or any document is drafted. This mapping exercise determines the entire subsequent structure. Skipping it – or deferring it until after the fund entity is in place – is the most common source of costly restructuring. Parties should verify the current licensing requirements against the regulators' published guidance before proceeding.

Which jurisdiction's law applies to a digital-asset fund structured through Hong Kong and Singapore?

No single jurisdiction's law governs the entire structure. The fund entity (typically Cayman Islands or BVI) is governed by the law of its incorporation; the management agreement is typically governed by the law of the management entity's jurisdiction – Hong Kong law or Singapore law; and the investor subscription documents and disclosures must comply with the regulatory requirements of every jurisdiction in which investors are solicited. The result is a multi-law structure, and the documents must be drafted accordingly. Where the laws of two jurisdictions conflict on a material point, the drafting must address the conflict explicitly rather than leave it to be resolved after a dispute arises.

How long does a digital-asset fund structured through Hong Kong and Singapore usually take?

Timeline depends primarily on the licensing route. Licence applications in Hong Kong and Singapore involve fitness-and-propriety reviews, structural assessments and regulatory dialogue that typically extend over a period of months rather than weeks – the precise duration varies with the complexity of the proposed structure, the completeness of the application, and current regulatory processing volumes. The AML programme, constitutional documents and investor disclosures run in parallel with the licensing process. Managers should plan for a material pre-launch period and not commit to investor timelines before the licensing analysis is complete. Verify the current regulatory processing position before setting any internal launch target.

Related practices

Tech & Web3 – digital-asset licensing, AML and cross-border structure across Hong Kong and Asia
Sanctions & AML – source-of-funds, travel-rule compliance and UN sanctions screening for fund managers
Holding Structures – offshore fund entity design and cross-border management architecture

About Lockhart & Yip

Lockhart & Yip is an independent international and cross-border counsel based in Hong Kong. We advise international groups, founders, family offices and their advisers on digital-asset fund structuring, licensing and AML compliance across Hong Kong, Singapore and the principal offshore centres, working alongside locally licensed firms on matters of Hong Kong law. Our desk is built around technology and Web3 regulation, sanctions and AML, holding structures, and cross-border enforcement. We regularly act on dual-jurisdiction fund matters of this kind. To discuss your position, write to info@lockhartyip.com.

Lockhart & Yip advises on international and foreign law. We do not practise the law of Hong Kong; matters of Hong Kong law are handled together with locally licensed firms. This publication is general information, not legal advice. For advice on your situation, contact info@lockhartyip.com.

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This publication is general information and does not constitute legal advice. For advice on your situation, contact info@lockhartyip.com.

A practical guide to a digital-asset fund structured through Hong Kong and Singapore