Regulated, approved or registered crypto fund: what each status really guarantees

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This sixth installment of our series puts words in their place. You will see why MiCA does not apply to funds, what are the three levels at which a fund can be regulated, what a simple registration brings and what it does not bring, and how to verify a status in a few minutes in the official registers.

This article is brought to you by DCY. To learn about their approach, visit dcy.fund.

The MiCA regulation, fully applied in France since the end of the transitional period on July 1, targets crypto issuers and service providers: exchange platforms, custodians, brokers, advisors. Journal du Coin took stock of this major sorting at the end of September, with 35 players approved in France according to the ESMA register.

The shares of a fund are financial instruments, even when the fund invests only in cryptos. They therefore fall outside the scope of MiCA and fall under the texts on asset management, first and foremost the 2011 AIFM directive, transposed in each country of the Union. A “MiCA approved” crypto fund does not exist. When the formula appears, it generally designates the platform on which the fund holds its assets, which protects the conservation of these assets but says nothing about the fund or its manager.

To know what “regulated” means, we need to ask three distinct questions.

Is the fund itself supervised? Some funds are approved as products: the authority examines their documents before launch and then monitors their functioning. This is the case for funds open to the general public, such as UCITS, and certain categories of alternative funds. Other funds are not supervised as products. They exist legally, they have statutes, accounts and an administrator, but no authority has validated their documents.

Is the manager licensed or registered? The AIFM directive applies to the manager rather than the fund. A manager above the thresholds must obtain full approval: minimum capital, risk management, remuneration policy, detailed reports. Below the thresholds, he can be satisfied with a recording. This is the point that creates the most confusion, and we return to it below.

Can the shares be offered to the public? Marketing a fund to individuals follows rules specific to each country. An unsupervised fund, managed by a registered manager, is generally reserved for professional or informed investors, with a high entry fee, and cannot be canvassed freely in France.

The same fund can therefore be unsupervised as a product, managed by a registered manager, and reserved for informed investors. To describe it as “regulated” without specifying would be misleading, since none of the three levels have been approved.

Machine-translated from French