As cryptocurrencies like Bitcoin and other digital currencies reached record highs in 2021, Citizenship By Investment (CBI) programs gained traction as successful crypto entrepreneurs and crypto investors bought into the perks offered by second citizenship. However, the interaction of cryptocurrencies with the CBI sector has led to some confusion and misinformation. In this article, we will debunk some of the most common myths and misconceptions surrounding the impact of cryptocurrencies on the world of CBI.
Myth #1: You can Acquire Citizenship with Cryptocurrencies
One of the most pervasive myths surrounding CBI and cryptocurrencies is that a crypto investor can simply use digital assets to acquire citizenship in a country offering an investor route to citizenship. While qualifying investment classes under some CBI programs include real estate, start-ups, investment funds and government bonds, none of them currently allow applicants to qualify through a donation in cryptocurrency. This is largely due to the regulatory uncertainty surrounding cryptos, a lack of familiarity with crypto-generated wealth and lacking sophistication in methods for tracing and auditing source of wealth in this area to the high due diligence standards demanded by CBI programs. Moreover, governments are generally conservative when granting citizenship by investment and have so far shied away from allowing crypto investments or donations towards naturalisation by investment.
Myth #2: A Combination of Cryptocurrencies & CBI Programs Provide High Money Laundering Risk.
Another common misconception is that CBI programs are a convenient way to launder money using cryptocurrencies. In reality, this is far from the truth. CBI programs are often the subject of stringent anti-money laundering and counter-terrorism standards imposed by the OECD and FATF. They impose strict due diligence checks and any applicant with a history of financial impropriety or criminal activity will be caught out by the various due diligence systems and ultimately rejected. The CBI due diligence checks extend to the tracing and auditing of any crypto wallets held and to verifications of the source of wealth records of the investor. Our specialist lawyers are able to provide source of wealth and crypto tracing reports.
Myth #3: CBI Countries are Embracing Cryptocurrencies
While some countries, like Malta, have been more welcoming to cryptocurrencies than others, there is no evidence to suggest that CBI countries are particularly enthusiastic about digital assets. In fact, some CBI countries have expressed concerns about the potential for cryptocurrencies to be used for illicit activities such as money laundering and terrorism financing. Moreover, many CBI countries have small, tightly regulated financial sectors and may not have the capacity to deal with the complexities of digital assets. As a crypto-friendly citizenship jurisdiction, Malta’s investor residency route to citizenship is able to accept investor applicants who have made their fortunes with crypto-related ventures as long as they are able to prove their legitimate source of wealth.
Myth #4: Cryptocurrencies in Citizenship by Investment Act as Tax Evasion Schemes
It has been suggested that crypto investors may use CBI programs to hide their true origin or country of residence, leading to tax evasion. However, in practice, the banking system is subject to FATCA and CRS reporting obligations that refer to the effective country of tax residence of a depositor rather than their nationality. A second citizenship, or even an alternative residency would not disguise the country of birth that is a minimum requirement on international passports. Proving tax residency to one’s bank requires producing a certificate of tax residency which presumes the ability to prove to the satisfaction of the tax authorities that that person is sufficiently connected with the country through presence, commercial activity, investment holdings, family life, property ownership or other links to that country.
Thus, while cryptocurrencies and CBI programs may seem like natural bedfellows, the reality is that the two are not as closely connected as some people believe. Investing in CBI programs with cryptocurrencies is currently only possible if such currencies are first converted to FIAT, and then subject to source of wealth audits and wallet tracing to ensure the legitimacy of the funds accumulated through crypto activity.
European Citizenship Lawyers
Our European citizenship lawyers advise on the various citizenship and immigration routes in Europe. We dedicate personal attention to each client and oversee each citizenship case individually. We help our clients assess which European citizenship route best suits their objectives and whether they qualify for relevant laws. As Maltese citizenship agents with extensive experience of Maltese citizenship and investor immigration, we offer a holistic coverage of all immigration and relocation and all relevant tax and legal services.
ACC Immigration Advisors (Malta company registration number C-44042) is duly authorised to act as a licensed Malta citizenship agent in terms of the Agents (Licences) Regulations, 2020 (L.N. 435 of 2020) and bound by the “Licence Agreement and Code of Conduct and Ethics for Agents” entered into with Community Malta Agency, under official Malta licence number AKM-ACCA-21.
Our Malta-citizenship Services for Crypto Investors
We specialize in assisting crypto investors with their residency and citizenship in Malta. Our services include:
- Immigration advice: We provide expert guidance on the best-fit residency and citizenship programmes available in Malta, assessing your eligibility for such programmes.
- Applications for Maltese residency and citizenship programmes: We are licensed filing agents but provide legal and tax expertise to compile a high-quality application file that you deserve to ensure that your application is processed efficiently.
- Tax planning and advisory: We provide tailored tax planning solutions to ensure legal certainty of your favourable tax position in Malta.
- Crypto source of wealth reports: We prepare reports confirming legal source of wealth and provide crypto wallet screening and AML and sanctions screening.
As cryptocurrencies like Bitcoin and other digital currencies reached record highs in 2021, Citizenship By Investment (CBI) programs gained traction as successful crypto entrepreneurs and crypto investors bought into the perks offered by second citizenship. However, the interaction of cryptocurrencies with the CBI sector has led to some confusion and misinformation. In this article, we will debunk some of the most common myths and misconceptions surrounding the impact of cryptocurrencies on the world of CBI.
Myth #1: You can Acquire Citizenship with Cryptocurrencies
One of the most pervasive myths surrounding CBI and cryptocurrencies is that a crypto investor can simply use digital assets to acquire citizenship in a country offering an investor route to citizenship. While qualifying investment classes under some CBI programs include real estate, start-ups, investment funds and government bonds, none of them currently allow applicants to qualify through a donation in cryptocurrency. This is largely due to the regulatory uncertainty surrounding cryptos, a lack of familiarity with crypto-generated wealth and lacking sophistication in methods for tracing and auditing source of wealth in this area to the high due diligence standards demanded by CBI programs. Moreover, governments are generally conservative when granting citizenship by investment and have so far shied away from allowing crypto investments or donations towards naturalisation by investment.
Myth #2: A Combination of Cryptocurrencies & CBI Programs Provide High Money Laundering Risk.
Another common misconception is that CBI programs are a convenient way to launder money using cryptocurrencies. In reality, this is far from the truth. CBI programs are often the subject of stringent anti-money laundering and counter-terrorism standards imposed by the OECD and FATF. They impose strict due diligence checks and any applicant with a history of financial impropriety or criminal activity will be caught out by the various due diligence systems and ultimately rejected. The CBI due diligence checks extend to the tracing and auditing of any crypto wallets held and to verifications of the source of wealth records of the investor. Our specialist lawyers are able to provide source of wealth and crypto tracing reports.
Myth #3: CBI Countries are Embracing Cryptocurrencies
While some countries, like Malta, have been more welcoming to cryptocurrencies than others, there is no evidence to suggest that CBI countries are particularly enthusiastic about digital assets. In fact, some CBI countries have expressed concerns about the potential for cryptocurrencies to be used for illicit activities such as money laundering and terrorism financing. Moreover, many CBI countries have small, tightly regulated financial sectors and may not have the capacity to deal with the complexities of digital assets. As a crypto-friendly citizenship jurisdiction, Malta’s investor residency route to citizenship is able to accept investor applicants who have made their fortunes with crypto-related ventures as long as they are able to prove their legitimate source of wealth.
Myth #4: Cryptocurrencies in Citizenship by Investment Act as Tax Evasion Schemes
It has been suggested that crypto investors may use CBI programs to hide their true origin or country of residence, leading to tax evasion. However, in practice, the banking system is subject to FATCA and CRS reporting obligations that refer to the effective country of tax residence of a depositor rather than their nationality. A second citizenship, or even an alternative residency would not disguise the country of birth that is a minimum requirement on international passports. Proving tax residency to one’s bank requires producing a certificate of tax residency which presumes the ability to prove to the satisfaction of the tax authorities that that person is sufficiently connected with the country through presence, commercial activity, investment holdings, family life, property ownership or other links to that country.
Thus, while cryptocurrencies and CBI programs may seem like natural bedfellows, the reality is that the two are not as closely connected as some people believe. Investing in CBI programs with cryptocurrencies is currently only possible if such currencies are first converted to FIAT, and then subject to source of wealth audits and wallet tracing to ensure the legitimacy of the funds accumulated through crypto activity.
European Citizenship Lawyers
Our European citizenship lawyers advise on the various citizenship and immigration routes in Europe. We dedicate personal attention to each client and oversee each citizenship case individually. We help our clients assess which European citizenship route best suits their objectives and whether they qualify for relevant laws. As Maltese citizenship agents with extensive experience of Maltese citizenship and investor immigration, we offer a holistic coverage of all immigration and relocation and all relevant tax and legal services.
ACC Immigration Advisors (Malta company registration number C-44042) is duly authorised to act as a licensed Malta citizenship agent in terms of the Agents (Licences) Regulations, 2020 (L.N. 435 of 2020) and bound by the “Licence Agreement and Code of Conduct and Ethics for Agents” entered into with Community Malta Agency, under official Malta licence number AKM-ACCA-21.
Our Malta-citizenship Services for Crypto Investors
We specialize in assisting crypto investors with their residency and citizenship in Malta. Our services include:
- Immigration advice: We provide expert guidance on the best-fit residency and citizenship programmes available in Malta, assessing your eligibility for such programmes.
- Applications for Maltese residency and citizenship programmes: We are licensed filing agents but provide legal and tax expertise to compile a high-quality application file that you deserve to ensure that your application is processed efficiently.
- Tax planning and advisory: We provide tailored tax planning solutions to ensure legal certainty of your favourable tax position in Malta.
- Crypto source of wealth reports: We prepare reports confirming legal source of wealth and provide crypto wallet screening and AML and sanctions screening.