Crypto & Digital Asset Fund Formation Advisory

Ropes & Gray provides comprehensive legal advisory services for cryptocurrency and digital asset fund formation, structuring, and capital raising. The firm's integrated, cross-practice approach positions them at the forefront of advising asset managers on the full range of digital asset fundraising matters.

Fund Formation and Structuring

The firm advises on formation and structuring for registered funds, ETFs, and private funds, including venture and hedge funds focused on digital assets. Services include advising on regulatory compliance with SEC, CFTC, and other regulations applicable to asset managers, issuers of virtual currencies and tokens, foundations, DAOs, and other entities operating in the crypto and blockchain space. The team provides expert counsel on whether coins/tokens, NFTs, and other digital assets may be securities or commodities, considerations related to the formation of DAOs, initial coin/token offerings, minting of NFTs, grants and other token disbursement programs, and restrictions and requirements for reselling tokens that are securities.

Fund Documentation and Investor Relations

Ropes & Gray prepares comprehensive fund documents including private placement memorandums, limited partnership agreements, subscription booklets, and investment management agreements. The firm negotiates side letters with investors and arrangements with administrators and other service providers, handles cryptocurrency custody agreements, and manages derivatives trading documentation. The team advises institutional investors on due diligence considerations associated with investments in private funds investing in digital assets.

Investment Strategies and Compliance

The firm counsels clients regarding investments in ICOs, SAFTs, token warrants, and equity and debt investments in blockchain-focused companies. Services extend to staking, decentralized finance (DeFi), lending of digital assets, offshore trading considerations, and other similar investment activities. The team provides ongoing guidance on compliance with evolving regulatory requirements and enforcement priorities.

Tax Planning for Fund Structures

Integrated tax planning services evaluate tax consequences of cryptocurrency investments to different taxpayers in light of IRS guidance that cryptocurrencies are 'property' and applicable tax treatment of air drops, staking, lending, and other DeFi activities. Services include determining whether a fund is engaged in a US-trade or business and evaluating the application of safe harbor rules to various cryptocurrencies.

Notable Matters

The firm has advised Bain Capital on the launch of a $560 million cryptocurrency fund, advised on the launch of multiple funds investing in bitcoin and other digital assets, and advised a Bitcoin Futures Fund that was the first US registered investment company investing primarily in Bitcoin futures.