A digital-asset fund structured through Singapore

The window for establishing a dual-jurisdiction digital-asset fund is narrowing. Both Hong Kong and Singapore have moved from permissive silence to mandatory licensing regimes, and the documentation, substance requirements and regulator-engagement timelines that once felt optional are now deciding factors in whether a fund can lawfully operate. Foreign principals who approach this structure with a single-jurisdiction adviser – or with counsel who conflates the two regimes – pay for that mismatch in delays, regulatory queries and, in some cases, enforced restructuring.

A digital-asset fund structured through Hong Kong and Singapore requires parallel engagement with two distinct licensing regimes: the Securities and Futures Commission in Hong Kong, which governs virtual-asset trading platform licensing and the fund-management perimeter, and the Monetary Authority of Singapore, which applies its own licensing framework to fund managers and digital-payment-token service providers. The governing instruments in Hong Kong are the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (for the virtual-asset trading platform, or VATP, licensing regime, which commenced 1 June 2023) and the Securities and Futures Ordinance (where the digital asset is a security or futures contract). In Singapore, the Payment Services Act and the Securities and Futures Act together define the perimeter. Neither city's regime is a substitute for the other.

This note sets out the route we run, the decisions the client must own, and the point at which locally licensed counsel join the file.

When does a foreign principal actually need this structure – and what brings it to a head?

Most clients arrive at this question not from a standing start but from a pressure point. The most common: a fund approaching institutional investors who require a regulated management entity, a prime-broker or custodian who will not onboard without a licensing disclosure, or a lead investor insisting on a recognised jurisdiction before committing capital. Those triggers tend to arrive with a deadline attached.

In our cross-border practice, we regularly see three distinct categories of foreign principal. The first is a manager – typically from North Asia, the Middle East or Central and Eastern Europe – who has been running a discretionary digital-asset strategy for a small number of sophisticated investors on a private basis and needs to formalise before the next capital raise. The second is a Web3 project team that has generated treasury assets and is structuring a separate investment vehicle for those assets and for external co-investors. The third is a traditional asset manager expanding into digital assets and needing a parallel structure that sits alongside its existing regulated funds rather than forcing a rebuild.

All three arrive at the same structural question: where does the management entity sit, where does the fund vehicle sit, and which regulator applies first? The answer depends on where the investors are, where the assets are custodied, and what the fund actually does with those assets. A fund that holds, stakes and lends digital assets touches a different regulatory perimeter than one that simply buys and holds. Getting the characterisation right at the outset avoids a restructuring six months later.

The window-closing pressure is real. Regulators in both cities have signalled that unlicensed operations identified after a defined point will face enforcement rather than the softer transitional guidance that applied in earlier years. The cost of delay is measured in regulatory risk, not just in forgone investor commitments.

What governing instruments and regulators actually apply?

The Hong Kong regime operates on two tracks, and the track that applies depends on whether the fund's digital assets are securities. Where they are, the Securities and Futures Ordinance applies and the relevant licence category is Type 9 (asset management) under that ordinance, held by the management entity. Where they are not securities – or where the fund operates a centralised trading platform as part of its activity – the VATP licensing regime under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance is the primary instrument. That regime has been mandatory since 1 June 2023. The Securities and Futures Commission administers both tracks. In many fund structures, both tracks engage simultaneously.

The AML and travel rule obligations – the requirement to transmit originator and beneficiary information for virtual-asset transfers – apply to licensed VATPs in Hong Kong and to Digital Payment Token service providers in Singapore. These are not incidental compliance items. Custodian selection, counterparty onboarding and the fund's transfer architecture all need to be designed around them from the outset, not retrofitted.

In Singapore, the Monetary Authority of Singapore administers the Payment Services Act for digital-payment-token activities and the Securities and Futures Act for fund management. A Singapore-incorporated fund manager holding digital assets on behalf of clients will ordinarily require a Capital Markets Services licence for fund management, with conditions attached to the digital-asset perimeter. The two regulators – the SFC and the MAS – operate independently. There is no mutual recognition arrangement for fund-management licences between Hong Kong and Singapore. A manager licensed in one city cannot passport that licence into the other.

The practical consequence: a dual-jurisdiction structure requires two separate licensing tracks, two separate compliance programmes, and two regulatory relationships. What it gains in exchange is access to two investor pools, the ability to custody assets under two regulatory frameworks, and structural resilience against a single jurisdiction's policy shifts.

The sequence above describes the standard position. Your matter turns on the documents, the jurisdictions actually engaged, and the order of steps – which is where the route is won or lost.

For a structured assessment of the licensing position for your proposed digital-asset fund across Hong Kong and Singapore, write to us at info@lockhartyip.com.

How does the cross-border interface between Hong Kong and Singapore actually operate?

Hong Kong and Singapore are, in many respects, competitors for the same digital-asset management mandates. They are also increasingly treated by institutional investors as complementary rather than alternative – a structure that puts the management entity in one city and the fund vehicle in the other, or that uses one city as the primary regulatory anchor while operating from the other, is common in our cross-border practice. The structure works, but the interface requires careful management.

The most common dual-jurisdiction architecture places a Singapore-incorporated and licensed fund manager as the general partner or investment manager of a Hong Kong-registered or Cayman Islands-domiciled fund vehicle. The Singapore entity holds the Capital Markets Services licence for fund management; the Hong Kong entity (or the Cayman vehicle managed from Hong Kong) engages the SFC where Hong Kong-based trading or custody activity brings it within the VATP or Type 9 perimeter. Substance requirements apply in both cities: a licensing entity that exists only on paper will fail regulatory review.

AML obligations run in parallel. Each licensed entity must maintain its own customer due-diligence files, its own source-of-funds documentation, and its own transaction monitoring. Where the fund services investors in both cities, the investor onboarding process must satisfy the stricter of the two regimes – and in practice, that means building the compliance programme to the higher standard from the outset rather than maintaining two separate programmes.

Enforcement cooperation between the SFC and the MAS is real and documented. Both regulators participate in the International Organisation of Securities Commissions multilateral memorandum of understanding for cross-border cooperation. A compliance failure identified by one regulator will routinely be shared with the other where there is a jurisdictional overlap. Foreign principals sometimes underestimate how quickly a regulatory query in Singapore can generate a corresponding inquiry in Hong Kong, or vice versa. The compliance programme needs to be designed with that in mind.

A practical question arises at the point of investor onboarding: which entity contracts with the investor, and under which law? Where the management entity is Singapore-incorporated and the fund vehicle is Cayman-domiciled, the fund documents typically choose Cayman Islands law for the limited-partnership agreement and English law for the management agreement. Hong Kong law governs the compliance obligations of any Hong Kong-based operations. The interaction of these governing-law choices with the regulatory obligations of both cities is one of the less-obvious structuring decisions in this architecture.

What is the route we run, step by step?

The engagement runs in four defined phases, with locally licensed counsel joining at specific points. The sequence is not arbitrary: it reflects the order in which decisions gate subsequent steps.

Phase 1 – Characterisation and structure mapping. We begin by characterising the fund's proposed digital assets and activities against the regulatory perimeters of both cities. This determines which licensing tracks apply, whether the management entity should be incorporated in Hong Kong, Singapore or a third jurisdiction, and where the fund vehicle sits. The output is a structure map that identifies each regulated activity, the entity that will carry it, and the licence or exemption that applies. Locally licensed Hong Kong counsel join at this stage to confirm the SFC-facing position where any activity touches the Type 9 or VATP perimeter.

Phase 2 – Entity formation and constitutional documents. Once the structure is settled, entities are incorporated. For a Hong Kong management entity, this involves engagement with locally licensed Hong Kong firms who handle the Companies Ordinance (Cap. 622) registration, the Significant Controllers Register (as required since 1 March 2018), and the initial SFC application filings where a licence is required. For a Singapore entity, allied counsel admitted in Singapore handle the relevant incorporation and initial MAS engagement. We coordinate across both teams.

Phase 3 – Licensing applications and compliance programme. The licensing applications for both cities run in parallel where the structure requires it. This phase involves preparing the regulatory business plan, the compliance manual, the AML and travel-rule policies, the individual responsible-officer profiles, and the systems documentation that regulators require. The client must own the compliance programme: a fund that outsources its AML function entirely without maintaining genuine oversight will not satisfy either regulator on examination. We prepare the documentation and coordinate the submissions; the client designates the responsible officers and provides the source-of-funds evidence.

Phase 4 – Fund documents and investor onboarding architecture. Once the regulatory position is clear, the fund documents are prepared: the limited-partnership agreement or equivalent constitutional document, the investment management agreement, the subscription documents, the side-letter template, and the investor suitability framework. The governing-law and dispute-resolution clauses in these documents are calibrated to the jurisdictions where investors and assets are located. Arbitration under the HKIAC Administered Arbitration Rules (the 2024 Rules, effective 1 June 2024) is a common choice for management-agreement disputes, given Hong Kong's position as a seat with Mainland interim-measures access available since 1 October 2019.

If an earlier filing, structure or enforcement attempt produced an adverse or stalled result, a second read can identify the strategic error and the routes still open. Contact us at info@lockhartyip.com to discuss your position.

What decisions must the client own?

A digital-asset fund structured through two jurisdictions generates a set of decisions that cannot be delegated to counsel, to the compliance officer, or to the fund administrator. Regulators in both cities will look behind the professional appointments to assess whether the principals understand and control the business. The client must be able to demonstrate that understanding at any point during the licensing process.

The first non-delegable decision is the identity and background of the responsible officers. In Hong Kong, the SFC requires that responsible officers for a licensed corporation are individually approved and individually assessed for fitness and properness. In Singapore, the MAS applies a parallel requirement for representatives and directors of a licensed manager. The selection of these individuals – and the documentation of their experience, qualifications and compliance record – is a client decision, not an adviser decision. We prepare the documentation; the client chooses the people and stands behind them.

The second is the source-of-funds position for the fund's initial capital. Both regulators will scrutinise the provenance of seed capital and early investor commitments. Where capital originates from jurisdictions or counterparties that carry elevated AML risk, the documentation burden increases sharply. A principal who cannot produce clean, documented source-of-funds evidence for seed capital will find the licensing process significantly extended – or, in some cases, will need to restructure the capital base before the application can progress.

The third is the investment strategy and asset characterisation. Where the fund proposes to invest in digital assets that may be securities – governance tokens with economic rights, for example, or tokenised fund interests – the characterisation analysis determines the licensing perimeter. The client must understand the strategy well enough to explain it to a regulator and to confirm that the characterisation remains accurate as the strategy evolves. Strategy drift that crosses a regulatory perimeter without a licensing adjustment is one of the most common enforcement triggers we see in this space.

The fourth is the ongoing compliance posture. A licensed fund manager is subject to periodic inspections, mandatory reporting of material changes, and ongoing AML monitoring. The compliance programme is not a document produced once for the application. It is a live operational function. The client must maintain it, resource it, and update it as the regulatory position of either city changes.

What mistakes do foreign principals most commonly make in this structure?

Three errors appear on our desk with enough regularity to warrant specific attention.

The first is treating the two licensing regimes as equivalent and attempting to satisfy both with a single compliance programme built to the less demanding standard. They are not equivalent. The SFC and the MAS have developed their digital-asset frameworks independently, with different risk-appetite positions, different documentation expectations, and different approaches to the AML and travel-rule obligations. A compliance programme designed for one will have gaps when measured against the other. The gaps are discovered during regulatory review, not before.

The second is sequencing the structure decisions in the wrong order. The governing-law and incorporation choices – where the management entity sits, where the fund vehicle sits, which law governs the fund documents – have consequences for the licensing analysis that cannot be unwound cheaply once entities are incorporated and banking relationships are established. We regularly act on matters where a restructuring is required at the fund-document stage because the entity decisions were made without a full regulatory-characterisation analysis first. The sequence matters.

The third – and the one that most surprises foreign principals who come from jurisdictions where regulatory engagement is primarily documentary – is that the SFC and the MAS both assess the calibre and conduct of the people behind the application, not just the documents. A technically complete application with principals who cannot explain their compliance programme or their investment strategy in direct conversation with a regulatory reviewer will stall. The preparation for regulatory interviews and for ongoing supervisory engagement is as important as the documentation itself.

Self-assessment: is this structure right for your position?

Before investing in a dual-jurisdiction licensing process, it is worth testing the structure against a set of questions that experienced cross-border advisers would ask at the outset. Not every digital-asset fund requires a dual-jurisdiction approach; the additional regulatory cost is justified where the investor base, the asset perimeter, and the operational footprint genuinely span both cities.

Does the target investor base include institutional or professional investors who specifically require a regulated management entity in one or both cities?
Are the digital assets the fund proposes to hold or trade characterised as securities or futures contracts under either the Hong Kong or Singapore regime, or do they fall outside those perimeters?
Does the fund's proposed activity include operating or using a centralised virtual-asset trading platform, which engages the VATP licensing perimeter in Hong Kong?
Are the proposed responsible officers individually able to satisfy the fitness-and-properness assessment of both the SFC and the MAS?
Is the source-of-funds position for seed capital and early investor commitments fully documented and defensible under both cities' AML frameworks?
Does the fund's proposed investment strategy remain stable enough that a licensing application can accurately describe it, or is the strategy likely to evolve in ways that may cross a regulatory perimeter?
Is there a genuine operational presence – people, systems, decision-making – in at least one of the two cities, or does the structure risk being treated as a shell by regulators?

A "no" to any of these questions is not necessarily a disqualifier. It is an input to the structure decision. Some can be addressed through the structuring choices made in Phase 1; others require changes to the business or the team before the licensing process begins. The earlier these questions are answered, the less expensive the resolution.

Where does Hong Kong's enforcement and recognition posture matter for the fund?

The enforcement dimension of a digital-asset fund is not limited to regulatory compliance. Investor disputes, counterparty defaults, and custody failures all carry an enforcement angle – and in a structure that spans Hong Kong and Singapore, the choice of dispute-resolution mechanism and the enforceability of that mechanism across the relevant asset locations are material considerations at the fund-document stage, not afterthoughts.

Hong Kong's position as an arbitration seat is directly relevant. The Arbitration Ordinance (Cap. 609), modelled on the UNCITRAL Model Law, governs Hong Kong-seated arbitrations. The HKIAC Administered Arbitration Rules (2024 edition) provide the procedural framework. Awards from a Hong Kong-seated arbitration are enforceable in Mainland China through the 1999 Arrangement and the 2020 Supplemental Arrangement, with simultaneous enforcement applications permitted since the 2021 amendment. This is a material advantage for a fund with Mainland-connected investors or counterparties: an arbitration clause choosing Hong Kong as the seat provides access to the Mainland interim-measures regime that has been in effect since 1 October 2019.

For Singapore-connected parties, a Hong Kong arbitration clause still produces an award that is enforceable in Singapore under the New York Convention. Singapore is a Convention state; Hong Kong-seated awards are recognised without the Mainland-specific mechanism. The structural choice of arbitration seat is therefore partly a function of where the assets and the counterparties are – and where enforcement may ultimately be needed.

Separately, the recognition of Mainland court judgments in Hong Kong – and vice versa – under the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645), in force since 29 January 2024, creates an enforcement route for fund-related civil and commercial disputes that does not depend on arbitration. A fund manager with Mainland-connected investors or a Mainland sub-custodian should understand this mechanism at the document-drafting stage.

Our Tech & Web3 practice covers the full regulatory, structural and enforcement perimeter for digital-asset businesses operating across Greater China and the principal offshore centres. For related matters touching cross-border commercial agreements, our analysis of cross-border agreements touching Singapore and our briefing on cross-border agreements touching Cayman address the document and governing-law decisions that sit alongside the fund structure.

Related practices

Sanctions & AML – AML compliance, travel-rule obligations and counterparty due diligence for virtual-asset businesses
Holding Structures – offshore and Hong Kong holding vehicle design, substance requirements and cross-border governance

Frequently asked questions

Do I need a Hong Kong adviser for a digital-asset fund structured through Hong Kong and Singapore?

A digital-asset fund structured through both cities requires engagement with two distinct regulatory regimes that do not mirror each other. Where any part of the structure touches the Hong Kong regulatory perimeter – a Hong Kong-incorporated management entity, a Type 9 licence application, or VATP-related activity – international counsel coordinating with locally licensed Hong Kong firms is the appropriate model. A Singapore-only adviser will not have direct visibility of the SFC's expectations, the VATP licensing requirements under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, or the AML and travel-rule obligations that apply in Hong Kong. The regulatory risk of a gap between the two city positions sits with the fund and its principals, not with the adviser.

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

The timeline depends primarily on the licensing applications. Regulatory review periods in both Hong Kong and Singapore are not fixed by statute and vary with the completeness of the application, the complexity of the fund's activities, and the regulators' current caseload. In our cross-border practice, the licensing phase is consistently the longest element of the timeline – substantially longer than entity formation, document drafting, or investor onboarding. Principals should plan for a process of many months from the point of a fully prepared application, and should not commit capital-raise timelines to investors that depend on licensing being completed within a specific short period. Parties should verify the current regulatory processing times before acting.

What does the route look like for a digital-asset fund structured through Hong Kong and Singapore?

The route runs in four phases: characterisation and structure mapping (which determines the licensing perimeter and entity choices); entity formation and constitutional documents (with locally licensed counsel engaged in Hong Kong and Singapore respectively); licensing applications and compliance programme preparation (running in parallel for both cities); and fund document drafting and investor onboarding architecture. The client must own the responsible-officer appointments, the source-of-funds documentation, and the ongoing compliance function throughout. Internationally experienced counsel coordinate the cross-border elements and the document preparation; locally licensed firms handle the jurisdiction-specific regulatory filings and the Hong Kong law elements.

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