Crypto Fund regulatory issues and perspectives

Topic: Crypto Fund regulatory issues and perspectives

The regulation of Crypto-Funds, even for tier-one regulators, is still a kind of black box.

The lack of a clear understanding of operational strategies and risk assessment methods in the crypto space raises questions about capital adequacy benchmarks, intrinsic values of crypto-assets, and their classification as securities.

Let’s take a look at a «crypto fund» that does not accept a client’s cash to any of his wallets but monitors the entire cashflow via a smart contract chain that deploys/withdraws the liquidity for a specific automated strategy within a particular Pool of diverse DeFi Protocols.

Regulators face several key questions in this scenario:

- How can a Know Your Transaction (KYT) policy be implemented if a fund doesn’t handle client cash?

- Should a fund adhere to KYC/KYB policies when clients connect their wallets to a smart contract without traditional onboarding?

- Is the entity in question a traditional fund or merely a provider of trading tools, which clients lease via subscription plans?

This is just the tip of the iceberg the Regulators must address.

I'd be delighted to show how crypto funds can enhance transparency for regulators and investors. 

Evgeny Filichkin