Report by PwC and Elwood confirms Gibraltar as a jurisdiction of choice for hedge funds, backed up by leading fintech lawyers from ISOLAS LLP.
The third annual research report into the global Crypto Hedge Fund space, commissioned by PwC and Elwood Asset Management, has seen Gibraltar secure its place as the third preferred jurisdiction for the domiciliation of hedge funds, behind the Cayman Islands and the United States.
While the Cayman Islands and the United States maintained their position as the top-two places where crypto hedge funds are domiciled, their market share declined overall. Meanwhile, Gibraltar overtook the BVI and Luxembourg, pushing down Liechtenstein to less than 5%.
The data confirms that funds tend to be domiciled in the same jurisdictions as traditional hedge funds, supported by one of Gibraltar’s leading crypto and funds law firm, ISOLAS LLP. The firm continues to work with leading and disruptive crypto funds, managers and exchanges who choose the British Overseas Territory for its advanced regulatory approach, particularly on crypto and distributed ledger technology, in addition to its work with traditional hedge funds.
Jonathan Garcia, Partner at ISOLAS LLP, said: “From early days, Gibraltar has been on top of its game when it comes to the legal and regulatory landscape for crypto funds. We have proven to have one of the most forward-thinking governments globally regarding crypto and blockchain technology; this coupled with regulators that are willing and open to receive input from external industry experts has propelled Gibraltar to become one of the most attractive jurisdictions for fintech and crypto businesses.”
The report shows that the total Assets under Management (AuM) of crypto hedge funds globally increased to over US$3.8 billion in 2020 from just over US$2 billion in the previous year. Although the vast majority of assets are still highly concentrated among the top-10 largest hedge funds, which control 63% of total AuM, 2020’s crypto bull market – highly impacted by institutional investment in the space and an increase in general public interest in alternative investment solutions – saw a growth in the number of funds managing larger amounts of assets.
Joey Garcia, ISOLAS’ Fintech partner added: “The data in the report demonstrates that Gibraltar continues to hold a position of privilege in the sector, as interest continues to grow in our jurisdiction, but also points towards impressive overall growth. Increasing exposure to the space through appropriately regulated fund structures is an obvious trend, as is the jurisdictional base of the management teams involved so it is great to see Gibraltar independently recognised as one of these.”
Luke Walsh, a director and crypto-lead at PwC Gibraltar said: “Gibraltar’s global leading position in the crypto and fintech space is a testament of its commitment to keep at the forefront of financial and technological innovation. The jurisdiction’s fund offering is appealing to crypto fund investors and managers, particularly as regulation continues to evolve, which is very exciting, and it positions the jurisdiction as a jurisdiction of choice for crypto funds and other crypto businesses”.
The report, compiled from data gathered in the first quarter of this year, provides an overview of the global crypto hedge fund landscape and examines both quantitative indicators, such as liquidity, and qualitative aspects, such as custody and governance best practice.
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