A digital-asset fund structured through Singapor guide

Two regulators. Two licensing regimes. One fund. The principals who get this right are the ones who settle the jurisdictional question before they engage a fund administrator or appoint a manager. Those who get it wrong discover the problem at the point of investor onboarding – or, worse, at the point of a regulatory inquiry.

Structuring a digital-asset fund across Hong Kong and Singapore requires a clear analysis of where the fund's assets sit, where its manager is regulated, and which instrument – the Anti-Money Laundering and Counter-Terrorist Financing Ordinance in Hong Kong or the comparable Singaporean regime – governs the platform or management activity in each location. The two regimes do not mirror each other, and the fund structure must be mapped to both before a single investor subscription is accepted.

This guide walks through the decision sequence in order: the threshold choice, the licensing gate in each city, the AML obligations that attach at each step, and the three structural mistakes that cause funds to stall or restart.

What decision does the principal actually face at the start?

The first question is not "Hong Kong or Singapore" – it is "what activity does the fund conduct, and in which city does that activity occur?" The answer determines the regulator. A fund that manages a portfolio of virtual assets under discretionary authority is a different regulatory object from a fund that merely holds tokens through a centralised exchange. A trading platform is different again.

In Hong Kong, the relevant licensing authority for centralised virtual-asset trading platforms is the Securities and Futures Commission. Where the virtual assets in question constitute "securities" or "futures contracts" under the Securities and Futures Ordinance, the SFC's licensing requirements under that Ordinance apply in addition to – or instead of – the Anti-Money Laundering and Counter-Terrorist Financing Ordinance licensing regime. In Singapore, the Monetary Authority of Singapore administers the equivalent digital payment token services and capital-markets services frameworks under its own legislation.

The practical threshold: if the fund's mandate covers assets that qualify as securities in either jurisdiction, dual licensing exposure becomes real and the manager's domicile is the first gate, not an afterthought. Our desk sees this question answered too late, after the fund documents have already been drafted around a structure that cannot be licensed as written.

Map the asset universe first. Then map the activity. Then choose the manager's seat.

How does the choice of manager seat affect licensing in Hong Kong?

Hong Kong's mandatory licensing regime for centralised virtual-asset trading platforms commenced on 1 June 2023 under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, with the Securities and Futures Commission as the licensing authority. A fund manager or platform operator that is incorporated in Hong Kong, or that actively markets to Hong Kong investors, sits within the perimeter of this regime from that date.

Where the fund's virtual assets include tokens that the SFC classifies as securities or futures contracts, the Securities and Futures Ordinance licensing layer applies concurrently. A manager conducting Type 9 regulated activity (asset management) in respect of virtual-asset portfolios needs to satisfy both the SFC's requirements under the Securities and Futures Ordinance and any applicable requirements under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The two do not collapse into one. The licensing gate is sequential: establish the nature of the assets, then identify the regulated activity type, then apply to the correct licence category.

One common structural error is to appoint the fund manager as a BVI entity and assume the Hong Kong licensing requirement does not apply. That assumption fails if the manager or its officers are physically present in Hong Kong, if the fund is marketed to Hong Kong-connected investors, or if the trading activity takes place on a platform with a Hong Kong nexus. The relevant test is activity-based, not purely entity-based.

What does this mean for the sequence? Before filing any licensing application, the promoter needs a written analysis of whether the fund's activity in Hong Kong crosses the regulatory perimeter. That analysis is Step 1. It is not a formality.

What does the Singapore licensing gate require, and how does it interact with Hong Kong?

Singapore's Monetary Authority of Singapore administers two principal frameworks relevant to digital-asset funds. The first is the capital markets services licensing regime under the Securities and Futures Act, which applies where the fund's digital assets constitute capital markets products. The second is the digital payment token services regime under the Payment Services Act, which applies to dealing in or facilitating the exchange of digital payment tokens.

The interaction with Hong Kong is not merely a parallel question – it is a sequencing problem. If the fund holds assets that are classified differently in the two jurisdictions (a token that is a capital markets product in Singapore but falls outside that definition in Hong Kong, for example), the fund documents, the manager's mandate, and the investor disclosure materials need to address each classification separately. A single prospectus or information memorandum drafted to the lower standard will fail in the stricter jurisdiction.

In our cross-border practice, the most productive approach is to draft the constitutional documents of the fund to the higher of the two regulatory standards, then verify – jurisdiction by jurisdiction – that no provision creates a conflict with local requirements. This is more work at the outset. It avoids re-drafting at the subscription or redemption stage when investor funds are already in transit.

Singapore also imposes substance requirements (a minimum operational presence test) for certain fund vehicles. A Singapore-domiciled fund manager with no genuine economic activity in Singapore – no personnel, no investment decision-making, no material infrastructure – will face difficulty satisfying the Monetary Authority of Singapore that it is a genuine Singapore-resident operator. Substance is not a filing exercise. It is a real operational question that must be resolved before the licence application is submitted.

What are the AML obligations that attach at each step, and where do they bite hardest?

AML obligations in both Hong Kong and Singapore are not confined to the licensing moment. They are continuous and they attach to the fund at every stage of the investor lifecycle: onboarding, ongoing monitoring, transaction screening, and exit. The FATF travel rule (the requirement for virtual-asset service providers to transmit originator and beneficiary information with each transfer above the applicable threshold) applies to virtual-asset transfers processed by regulated entities in both cities.

In Hong Kong, entities licensed under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance must conduct customer due diligence, maintain transaction records, and file suspicious transaction reports in accordance with the Ordinance and the applicable guidelines issued by the relevant regulator. The Securities and Futures Commission has published detailed guidance on AML obligations for virtual-asset-related licensees. Singapore's Monetary Authority of Singapore has issued equivalent notices and guidelines under its own legislative framework.

Where does this bite hardest for a dual-jurisdiction fund? At the point where an investor is resident in one jurisdiction and the fund administrator or custodian is resident in the other. The customer-due-diligence file needs to satisfy the requirements of both competent regulators. A file that satisfies Singapore's Know Your Customer standard but falls short of Hong Kong's enhanced due diligence requirements for higher-risk investors is a compliance gap. It is not automatically cured by the fact that the investor relationship is managed from Singapore.

Practical implication: the fund's AML policy should be written to the stricter of the two standards as a baseline, with jurisdiction-specific annexes addressing any local variation. A single-standard policy is not adequate for a dual-jurisdiction structure.

We regularly advise fund promoters who have inherited a legacy AML policy drafted for a single-jurisdiction vehicle and are seeking to expand operations into a second regulated environment. The retrofitting exercise is manageable, but it requires a line-by-line review of the existing policy, the fund documents, and the administrator's operational procedures.

How does the cross-border structure affect investor onboarding and the subscription process?

Investor onboarding in a dual-jurisdiction fund is the point where structural decisions made months earlier produce their practical consequences – positive or negative.

If the fund manager is licensed in Singapore and the custodian or sub-manager is regulated in Hong Kong, the subscription agreement, the anti-money laundering questionnaire, and the source-of-funds documentation need to address the requirements of both regulators. Where those requirements diverge – on the scope of politically exposed person screening, on the treatment of corporate investors from non-cooperative jurisdictions, or on the required depth of beneficial-ownership disclosure – the fund documents must pick the higher standard or provide express jurisdiction-specific alternatives.

Consider a mid-market fund established in early 2027 with a Singapore-licensed manager and a Hong Kong-regulated custody arrangement for exchange-traded positions. The initial investor base was predominantly institutional and European. When the promoters sought to add retail and high-net-worth investors from the Gulf region, the existing onboarding documentation did not satisfy the enhanced due diligence requirements applicable in Hong Kong. The subscription process stalled for a full cycle while the documents were revised and the administrator's procedures were updated. The structural decision to use a split manager/custodian arrangement had been commercially sound. The documentation had not been written to match it.

The lesson is not to avoid a split arrangement. It is to draft the subscription and onboarding documents to the combined standard from the first closing, not the second.

The sequence at the onboarding gate is: (1) determine which regulator's standard applies to the specific investor type and relationship; (2) run the customer due diligence to that standard; (3) obtain source-of-funds documentation to the required depth; (4) screen against applicable sanctions lists. Hong Kong implements United Nations sanctions. It does not give domestic effect to the unilateral measures of other states. Singapore's sanctions posture follows its own legislative regime. Both screens must be run where the investor has a nexus to either jurisdiction.

For a structured assessment of your fund's onboarding framework across the relevant jurisdictions, write to us at info@lockhartyip.com.

What are the three structural mistakes that cause digital-asset funds to stall?

In our cross-border practice, three errors appear with enough regularity that they deserve their own section in any guide on this topic.

Mistake one: treating the regulatory analysis as a post-drafting exercise. The fund documents – the limited partnership agreement or trust deed, the private placement memorandum, the subscription agreement – are drafted first, and the licensing question is addressed afterwards. This sequence is backwards. The licensing position in each jurisdiction determines what activity the fund can lawfully conduct, how investors may be approached, and what disclosures are required. Fund documents drafted without a prior regulatory analysis frequently contain provisions that cannot be implemented by a licensed manager, or that require disclosure language the promoter did not intend to include.

Mistake two: conflating the manager's domicile with the applicable regulatory regime. A manager incorporated in Singapore is not automatically outside the Hong Kong regulatory perimeter if it conducts activity in Hong Kong, maintains personnel in Hong Kong, or actively markets to Hong Kong investors. The activity-based test applies in both jurisdictions. Domicile is relevant but not conclusive.

Mistake three: using a generic AML policy. A digital-asset fund operating across Hong Kong and Singapore faces two sets of regulatory guidelines, two supervisory bodies, and two potential enforcement jurisdictions. A policy written for a single-jurisdiction private equity fund – or borrowed from a prior structure – will not address the travel rule, the specific customer due diligence requirements for virtual-asset transfers, or the enhanced monitoring obligations for higher-risk digital-asset investors. The policy must be purpose-built.

If an earlier filing, structure, or licensing attempt produced an adverse or stalled result in either jurisdiction, a second read can identify the strategic error and the routes still open. Write to us at info@lockhartyip.com.

What does the step-by-step sequence look like from the first decision to first close?

The sequence below is not universal. Every fund turns on its specific asset universe, investor base, and manager structure. It is a practitioner's map of the standard progression, with the gate at each step identified.

Step 1 – Asset and activity classification. Before any legal documentation begins, produce a written classification of the fund's target assets in each jurisdiction. Are they securities, futures contracts, capital markets products, digital payment tokens, or none of the above under the relevant local law? The answer determines the licensing track. This is the gate at which many fund projects stall if the work is not done at the outset.

Step 2 – Manager seat and licensing track. Based on the classification, determine where the manager must be licensed and under which framework. If dual licensing is required, identify the sequencing: which application goes first, and whether the second application can run concurrently. In Hong Kong, the Securities and Futures Commission is the licensing authority. In Singapore, the Monetary Authority of Singapore administers both the capital markets services and digital payment token licensing tracks.

Step 3 – Fund vehicle and domicile. Select the fund vehicle – limited partnership, exempted company, unit trust, variable capital company – and its domicile. Common choices for digital-asset funds using Hong Kong and Singapore as dual hubs include Cayman Islands or BVI vehicles for the fund itself, with the manager sitting in one or both operating cities. The economic-substance requirements of the offshore domicile apply to the fund vehicle. The licensing requirements of each city apply to the manager and any other regulated-activity entity.

Step 4 – Draft constitutional documents to the combined standard. The private placement memorandum, the fund agreement, and the subscription documents must be drafted to satisfy the disclosure and investor-protection requirements of both jurisdictions simultaneously. Address the risk factors, the regulatory disclosures, and the redemption mechanics for each investor type and each regulatory classification of the fund's assets.

Step 5 – AML policy and onboarding framework. Draft the AML policy, the customer due diligence procedures, and the onboarding questionnaires to the higher of the two regulatory standards, with jurisdiction-specific annexes. Ensure the travel-rule procedures are in place for virtual-asset transfers. Confirm the sanctions screening process addresses both Hong Kong's United Nations-based regime and Singapore's applicable regime.

Step 6 – Licensing applications. File the licensing applications with the relevant regulators. The timeline for each application is a matter for current verification with the relevant authority – do not assume a specific period without checking the current position. Prepare for queries on substance, personnel, compliance arrangements, and AML procedures.

Step 7 – Investor onboarding and first close. Run the onboarding process to the combined standard for each investor. Confirm that source-of-funds documentation meets the requirements of both regulators. Run sanctions screening on each investor and each investor's beneficial owners. Then accept subscriptions and proceed to first close.

For digital-asset funds with a stablecoin component – where the Hong Kong Monetary Authority's licensing regime for fiat-referenced stablecoin issuers (issuers of stablecoins pegged to a fiat currency) may also be engaged – parties should verify the current commencement date and perimeter of that regime before including stablecoin-denominated instruments in the fund's mandate.

A decision checklist before the fund documentation begins

The following questions are the minimum a promoter should be able to answer before instructing counsel on fund documentation. They are not exhaustive, but a "no" or "unclear" answer to any of them is a signal that the regulatory analysis is not yet complete.

Has the fund's target asset universe been classified under both Hong Kong and Singapore law?
Has the relevant regulator in each jurisdiction been identified for the specific activity the fund will conduct?
Has the promoter confirmed that the proposed manager domicile and licensing track are compatible?
Has the substance position of the offshore fund vehicle been reviewed against the applicable economic-substance requirements?
Does the proposed fund vehicle and manager structure support the intended investor base – by type, by jurisdiction of residence, and by the applicable marketing restrictions in each location?
Has the AML policy been scoped to address the travel rule and the enhanced due diligence requirements applicable to virtual-asset investors in each regulated jurisdiction?
Have the sanctions screening obligations of both Hong Kong and Singapore been mapped to the investor base and the asset universe?
Is there a plan for ongoing regulatory compliance – not just at launch, but through the fund's life?

A "yes" to each of these questions does not guarantee a smooth licensing process. It does mean the fund promoter has identified the right questions before the documents lock in answers that may need to be unwound.

For more on the regulatory licensing position in Hong Kong, see our briefing at Virtual-Asset Trading Platform Licence – Hong Kong Briefing. For the full scope of our Tech & Web3 practice, visit our Tech & Web3 practice page. For cross-border agreement structuring considerations relevant to digital businesses, see our note on cross-border SaaS or data agreements touching Cayman.

Related practices

Sanctions & AML – AML compliance, sanctions screening, and source-of-funds analysis for cross-border transactions
Holding Structures – offshore and onshore vehicle selection, substance requirements, and cross-border structuring

Frequently asked questions

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

The first step is classifying the fund's target assets under the law of each jurisdiction before any documentation begins. The classification – whether the assets are securities, capital markets products, digital payment tokens, or none of the above – determines which regulator applies, which licensing track is required, and which disclosure obligations attach. Proceeding without this analysis is the most common cause of fund projects requiring a full restart after documents have been drafted.

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

There is no single answer: both jurisdictions' laws apply concurrently, to the extent that regulated activity occurs in each city. The Anti-Money Laundering and Counter-Terrorist Financing Ordinance and, where relevant, the Securities and Futures Ordinance apply in Hong Kong. Singapore's Securities and Futures Act and Payment Services Act apply in Singapore. The fund documents, the manager's licence, and the AML policy must each address the requirements of the jurisdiction in which the relevant activity occurs.

How does the cross-border element affect a digital-asset fund structured through Hong Kong and Singapore?

The cross-border element means that a single licensing standard, a single AML policy, and a single disclosure framework will not be sufficient. Where Hong Kong and Singapore impose different requirements – on customer due diligence depth, on the classification of specific digital assets, or on the marketing restrictions applicable to particular investor types – the fund's documentation and operational procedures must address the stricter standard or provide express jurisdiction-specific alternatives. The FATF travel rule for virtual-asset transfers applies in both regulatory environments and must be built into the fund's operational procedures from the outset.

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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 digital-asset fund structured through Hong Kong and Singapore: a step-by-step guide