With the advent of digital currencies, there have been many controversies regarding cryptocurrencies’ acceptability. While some countries do not frown on trading digital assets, most countries treat them as a commodity rather than legal tender.
This poses a major concern for those looking to obtain second citizenship via their crypto funds. This article will cover the legality and possibilities of obtaining citizenship by investment via crypto funds.
Citizenship by Investment
Citizenship by investment is a widespread practice in many countries. The countries use the funds to boost their economy or provide jobs for citizens of their country. The main ways to obtain citizenship by investment are:
- Making non-refundable donations to the National monetary fund or any designated account.
- Purchasing a minimum worth of government bonds and keeping it for a specified time
- Investing in a government-approved real estate project
- Investing in a business that provides jobs for many citizens in the country.
Before starting the process, you should get familiar with the requirements of the proposed investment you want to make. The requirements for each of these differ according to country. In St. Lucia, for example, the non-refundable donation for their citizenship costs a minimum of $100,000, while Malta charges €125,000 for a similar process.
Obtaining citizenship by investment with crypto funds
Contrary to the opinion or information you may have come across online, you cannot directly get second citizenship using cryptocurrencies. Using crypto directly to obtain citizenship by investment is impossible because of its extensive complexities and regulations. While there are speculations about the acceptance of cryptocurrencies for the CBI program in Vanuatu, the authorities have debunked the news.
This is because crypto is regarded as a commodity, just like a car in many economies. The only condition wherein you can use crypto is if you sell the crypto for cash and then pay tax on it before using the funds to apply for second citizenship. Having a Mercedes worth $500,000 does not equal having $500,000 to invest. To invest the money, you need to put the vehicle up for sale, get your money, pay the necessary dues, and then invest the rest before you can be eligible for second citizenship.
The main problem with using crypto for investment citizenship is the banks. The banks require you to pay investment fees, duties, and other fees in fiat currencies. After converting the crypto to cash, you need to provide proof of the legit sale of the coins and evidence of the transaction. You also have to provide supporting documents for transactions on the crypto side. Some countries will require you to pay tax on the profit from the crypto sold.
If you are considering CBI via your crypto funds, you should seek the services of experts like ntltrust.com. They will provide you with the needed advice and the best option to achieve this.
Possible solutions at the moment
Simply showing your crypto wallet does not suffice at the moment because the authorities cannot confirm the legality. The coins could have been gotten from hacking or other illegal means, hence the need to prove the legality. The most viable solution for an investor will be to sell the crypto assets with all the required paperwork and then pay with cash from the assets’ sales. This process is often subject to a lot of scrutiny and due diligence.
If you are going this route, do not sell the coins to your friends or an unregulated currency exchange. You will be required to provide the sales contract, screenshots, and chat on a personal account leading to the sale of the coins. You must also pay all the taxes needed in due time and provide the documents required by the jurisdiction.
Another possible solution would be to convert the crypto to cash and invest in a physical business. After running the business for some years, you can then tender the business as a legitimate source of income and apply for your second passport. You have a higher chance of being accepted using this method than the previous one.
Possible solutions in the future
There are no guarantees that the situation will change anytime soon or not; however, with the gradual adoption of crypto in many countries, we may see a change in the near future. Recently, we have seen the central bank of eight Caribbean countries working towards their cryptocurrency coin, DCash. We have also seen the government of Portugal exempting cryptocurrency transactions from paying VAT.
Cryptocurrency is becoming more accepted in many countries, including Canada, The Netherlands, Luxembourg, Switzerland, and Singapore. If bitcoin and other cryptocurrencies become recognized as legal tender rather than a commodity, investors can use them to obtain citizenship by investment. It will be easy to create regulations around it and simplify the due diligence process.
Legalizing cryptocurrency as a legal tender will also provide a universally trusted transfer and conversion system that will unify the process and allow crypto investors to apply for a second passport easily. It will also make the due diligence process more accessible and more standardized. It may also excite the crypto community, allowing them to seek citizenship in newer crypto-loving countries, establishing and doing business there.
Realities of the present
Legally obtaining second citizenship with crypto funds is not possible now. We hope that with appropriate regulations, governments will accept crypto for a second passport later in the future. In the meantime, crypto investors can sell their coins, pay taxes, and apply for dual citizenship.
Another alternative is to sell the coins and then use the money to start a business, and after a few years of running the company, you can apply for second citizenship.