Legal Considerations
Last updated
Last updated
Disclaimer: Fume provides a software tool that helps fund managers facilitate their investment operations. Fume is not considered an intermediary and holds no responsibility for ensuring compliance with regulations that apply to the management of collective investment schemes. Fund managers using Fume are solely responsible for ensuring their operations meet any regulatory requirements.
The regulatory framework surrounding digital assets is evolving, and in many jurisdictions, it remains in the early stages. This lack of clarity is a major entry barrier for traditional fund managers. Fume is built with compliance at its core, adhering to current regulations. However, given the differences in regulation across jurisdictions, fund managers must ensure that their operations comply with the specific laws applicable to them.
For example, certain jurisdictions allow fund managers to operate below a threshold of assets under management and a limited number of investors without requiring a license—commonly seen with "friends and family" investments. Managers should seek legal advice to determine whether such exemptions apply to their operations.
Fume operates as a Software-as-a-Service (SaaS) platform, providing fund managers with a technical solution for on-chain fund administration. Managers who choose this model retain full responsibility for their own compliance obligations, including fund structuring, licensing, KYC/AML procedures, and regulatory filings.
By using Fume exclusively as a software tool, managers can maintain control over their regulatory setup while leveraging the platform’s automation and smart contract infrastructure to streamline fund administration. This option is ideal for fund managers who already have the necessary legal frameworks in place and are looking to integrate blockchain technology into their operations.
Managers can choose to either use their own license or collaborate with Fume's partners to arrange for the creation of a dedicated compartment within an existing licensed structure. This option allows fund managers to outsource compliance duties and focus solely on their investment strategies.
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Fume's platform supports a range of legal structures for fund managers:
Alternative Investment Funds (AIFs): In Europe, funds may be registered as Alternative Investment Funds under the AIFMD framework, depending on their size and scope.
Securitization Vehicles: Alternatively, fund managers can use securitization vehicles on the platform to tokenize debt notes, providing an additional structuring option.
We strongly recommend that fund managers perform Know Your Customer (KYC) checks and adhere to Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) requirements for any investor participating in their on-chain fund. Ensuring compliance with AML/CFT regulations is crucial to avoid legal and financial risks. For a cost-effective and digital solution, we suggest considering AMLBot as a reliable service for these checks.
By following these guidelines, fund managers can leverage Fume’s technology while staying compliant with the legal frameworks governing their jurisdictions.
