Establishing AIF in Liechtenstein for Crypto Assets

The Principality of Liechtenstein is particularly appealing for investors for a number of reasons. Some of them include:

• Liberal regulatory framework
• Streamlined taxation
• Protection of sensitive data
• Access to Europe (EU / EEA) due to liberalization of service provision
• Neutrality
• Little interference on the part of the government
• Highest ratings of international rating agencies 

Establishing investment funds in the state of Liechtenstein has a number of distinct advantages. Here are some of the pros of setting up investment funds in the state of Liechtenstein:

• Sharing of risks: investors can put their money in different companies & areas of activity by using small investment funds.
• Flexibility: investments in investment funds may be sold for NAV 
• Transparency: All operations are reflected in reports submitted on a semi-annual & annual basis. 
• Security: Funds’ assets are stored separately by the depositor & are given the  special assets status. Consequently, in case of the depositary’s bankruptcy, they aren’t recognized as insolvent.
• Regulation: Compliance with the ‘investor above all’ rule is ensured by highly professional accountants.

AIFs in the state of Liechtenstein s a legally-dependent open-ended collective investment undertaking that is governed by local regulations relating to the management of AIFs of the Principality of Liechtenstein.

An AIF is a legal relationship established by agreements with identical content between investors and AIFMs for the purpose of investing assets & providing services of a depository at the expense of investors. 

The legal relationship between investors and AIFMs is governed by the Fund Agreement, provided that it does not contain any provisions of Liechtenstein's General Civil Law (ABGB). 

AIFMs

Establishing an AIF in Liechtenstein will require investors to set up an AIFM.

AIFMs have a special right to buy, sell, sign and exchange securities and other assets. They can also enjoy all rights that are directly or indirectly related to AIF assets.

AIFM always acts in the interests of AIF, investors and market integrity. Moreover, equal treatment of investors is of paramount importance. Privileged treatment of individual investors is strictly prohibited.

In carrying out its activities, AIFM must comply with the relevant provisions, in particular AIFMG / AIFMV. 

The main goal of an AIF is to invest in cryptocurrencies and digital assets. These assets are then sold on various exchanges for cryptocurrencies and other assets. The fund also invests in other money market instruments, such as floater bonds, term deposits and other bonds, public bonds or bonds of public issuers, ETFs and collective investment schemes.

Taxation

All Liechtenstein-based AIFs with the legal form of a contractual investment fund or collective trust are taxable in Liechtenstein. At the same time, income from managed assets represents non-taxable income.

Issuing of AIF shares in Liechtenstein is not taxed on the issue or transfer of securities. The transfer of ownership of the investor’s shares as payment is subject to a transfer tax if one of the parties or the intermediary is a national securities trader. The repurchasing of investor shares is exempt from tax on the transfer of securities. A contractual investment fund / collective trust is considered an investor exempted from tax on the transfer of securities.

Organizing an AIF in Liechtenstein for Crypto Assets

Establishing an AIF for cryptio activities involves several stages, namely: 

• Signing of an agreement between the investor (s) and the Management Licensed Company (AIFM) in Liechtenstein.
• Preparation of documents and negotiations with the depositary bank.
• Preparation and submission of documents to the FMA. These documents should, in particular, include:

1. a business plan containing AIF data;
2. AIF statutory documents;
3. certificates of choice by the depository and auditor;
4. AIF or investor information for AIF;

• FMA decision regarding AIF licensing / authorization.

There are no requirements regarding the availability of mandatory paid-in capital when organizing AIFs in the state of Liechtenstein. However, there is a requirement to attract 1.25 million Euros during the first year of the fund’s operation.

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