International law firm Simmons & Simmons has advised Arrano Capital, the blockchain arm of Venture Smart Asia Limited, on the launch of the first cryptocurrency fund in Hong Kong to have an advisor and distributor that is licensed and approved by the Hong Kong Securities and Futures Commission (SFC). Arrano Capital will act as offshore adviser, while Venture Smart Asia Limited will act as the advisor and distributor to Digitrackers SPC and its first Segregated Portfolio, Digitrackers Bitcoin SP (a Cayman Islands exempted limited segregated portfolio company and segregated portfolio) (together the Fund).
The Fund launch follows the 2018 announcement by the regulator on the new regime for the distribution and management of digital assets funds by regulated entities under the Securities and Futures Ordinance (SFO), and represents one of the first launches of its kind in Hong Kong where the SFC has contemporaneously imposed the “Proforma Terms and Conditions for Licensed Corporations which manage Portfolios that Invest in Virtual Assets” (issued in October 2019) on the licence of Venture Smart Asia Limited, a regulated entity under the SFO.
The Fund is a tracker fund that only buys and holds Bitcoin. Additional segregated portfolios may be added at a later stage that will deploy other digital assets / cryptocurrency strategies.
Gaven Cheong, a partner at Simmons & Simmons commented, “Working on this fund was a challenging, yet rewarding experience. Teamwork has always been an essential part of our firm’s DNA and this is an excellent example of multi-disciplinary teams across the company acting in unison. As a result, we were able to collaborate effectively to navigate the regulatory landscape and guide the client through a successful application to the SFC, followed by structuring and documentation of the Fund.”
Simmons & Simmons acted as international lead counsel in drafting the fund’s documentation and the licensed manager’s counsel in representations that were made to the SFC for permission to advise and distribute the Fund in Hong Kong.
“The team at Simmons is highly knowledgeable and they were able to guide us through complicated regulatory matters which has enabled us to set up this first of its kind fund”, said Avaneesh Acquilla, Chief Investment Officer of Arrano Capital, which is the blockchain arm of Venture Smart Asia Limited.
The Simmons & Simmons legal team comprised of funds and structured product specialists including Gaven Cheong (Partner, Simmons & Simmons), Jolyon Ellwood-Russell (Partner, Simmons & Simmons) and Louisa Ma (Supervising Associate, Simmons & Simmons).