Using Bitcoin for International Transfers with Des Landen of CrypBrokers

Using Bitcoin for International Transfers with Des Landen of CrypBrokers

With increasing scrutiny by USCIS over path of funds, and especially third party transfers from countries with currency restrictions, the EB-5 market is seeking new legal and efficient ways for investors to transfer money.  One possible solution is Bitcoin.  Bitcoin, the cryptocurrency that has taken the globe by storm, would provide an opportunity for investors to make a direct purchase of bitcoins from their foreign account, and sell those coins for USD.  Bitcoin purchases are common and legal in many countries including the U.S., U.K. and China.  MSA recently sat down with Crypbrokers’ Des Landen to discuss how Bitcoin and other cryptocurrencies can be utilized in the EB-5 market.

Click here to access the podcast 

EB-5 Investment Voice,

(Mona Shah & Associates Podcast Series)

Reported by Hermione Krumm, Esq.

EB-5 Investment Voice is the only Podcast series that focuses on and the United States immigrant investor visa, EB-5 and foreign direct investment. Mona Shah, welcomes guests from the industry including: Developers, Regional Center Operatives, Attorneys, Legislators and Politicians.

In this podcast, Mona delves into the topic of cryptocurrencies with Des Landen of CrypBrokers, exploring how Bitcoin might be employed to tackle the challenge of transferring funds for EB-5. Des entered the trading world in 2009, when Bitcoin was getting its start.  Today, he works with blockchain technologies and liquid supplies of cryptocurrencies. Mona and Des discussed the benefits a company like CrypBrokers can bring to investors with the process of transferring cryptocurrency, and the potential roadblocks investors might encounter in using Bitcoin to invest in an EB-5 project.

Mona starts the episode by pointing out the two most serious challenges facing EB-5 and the solution thereto in keeping EB-5 alive, i.e. 1) increasing the visas, and 2) finding a way to tackle the difficulties in transferring currency.  It has become increasingly difficult to transfer funds out of countries like China and Vietnam, and perhaps Bitcoin is the solution.

 

The Fundamentals of Cryptocurrency

  • Cryptocurrency is a digital asset in the form of an electronic payment, and Des contends that it is paving the way for the future of money transfers around the world. Cryptocurrency employs a peer-to-peer network, eliminating the banking system as a third party in the transaction, and it operates through blockchain technology.
  • The transfer of cryptocurrency is quick and cost-efficient. Mona contends that cryptocurrency is not subject to the banking regulations and verification procedures which contributes to transfers being so much faster. The regulations surrounding its use are dependent upon the local government, and it is fresh in the sense that a lot of the regulations are currently being created.  Primary advantages to Bitcoin transfers are the very small fees incurred to making transfers and the speed and efficiency of the transfers.
  • While CrypBrokers deals predominately with Bitcoin, it is just one kind of many cryptocurrencies.
  • Bitcoin’s value is not tied to that of any other currency. Instead, its worth is determined by the open market. Fluctuations in price are based on supply and demand. Now there are a lot of fluctuations because the market is growing with a high speed. With ICOs (Initial Coin Offerings), you can buy Bitcoin or other cryptocurrencies, like Ethereum, like an IPO. As a result, this marketplace has become extremely dynamic and is experiencing a large influx of capital. 

 

How the Bitcoin Transfer Process Might Work for a Chinese Investor

  • The client’s first step would be to set up a Bitcoin wallet using a PC or cell phone. Thereafter, the client transfers money to an account in China and CrypBrokers will facilitate a price based on the exchange rate at the time from RMB to Bitcoin—as close to spot as possible.
  • The negotiated amount is then transferred to the client’s wallet app, and they have the ability to instantly transmit the money via the blockchain ledger to another bitcoin address in the US, for example.  Once the money is in Bitcoin, the money can be cashed out for USD and remain in a virtual wallet until a U.S. bank account becomes available, or can be sent directly to a U.S. bank account from the Bitcoin wallet.
  • RMB rates are speculative. Just as if an investor were locking in a USD rate to send his RMB to the U.S., Bitcoin follows the same process. Cryptocurrency is highly volatile, thus an investor seeking a transfer could be on the underside or the high side; it depends on market forces during that time, and recent trends have suggested increases in Bitcoin prices.
  • In terms of safeguarding the investor’s funds, there would be an agreement in place for the transfer of funds.  Bitcoin prices are based on the exchange price and are not arbitrary.  Bitcoin works on a public ledger, i.e. the block chain, which cannot be changed or hacked: there is no double transaction and it is fixed for life.
  • CrypBrokers lives by the KYC philosophy: Know Your Customer. They employ identification requirements similar to those banks would accept for international transfers.  Further, the client’s money is safeguarded by tracking each transaction on the blockchain’s public ledger.

 

How do Banks Regulate Bitcoin and Handle Transactions?

  • Mona states that Bitcoin is recognized as a commodity by the Commodity Future Trading Commission in the US and is taxed as property by the IRS.
  • In the U.S. regulations may vary from state to state, so banking laws will be dependent on where the money arrives.

 

CrypBrokers’ Origin Story and Client Base

  • CrypBrokers began three years ago to fill a need in the American industry. The supply of Bitcoin comes from China and goes through separate routes around the world. To provide an avenue to support high-net-worth U.S. clients, CrypBrokers had to establish a business in the U.S.
  • CrypBrokers also serves people in undeveloped countries, as Bitcoin can be transferred anywhere around the world with an internet connection and a phone. The company has offices in Dubai, Hong Kong, Singapore, China, Australia, New Zealand, and the U.S.

 

The Benefits of Using CrypBrokers Versus Bitcoin Exchanges

  • As a Bitcoin broker, CrypBrokers has a relationship with the mining farms or big warehouses that use computer technology to pump apps. Those mining farms are mostly located in China. As such, the company gets wholesale rates, and they can supply large sums at as close to spot price as possible.
  • There are no limits on how much a person could send, which is different from purchasing with a credit card where a limit is set. CrypBrokers maintains 70% of world’s supply of cryptocurrency, so they can accommodate transfers of $5,000 to $500M, and the company trades in all the major exchanges around the world.

 

The Challenges Around Using Cryptocurrency for EB-5

  • Mona believes that while USCIS would likely accept Bitcoin, the challenge may come from banking institutions themselves. Clients who might want to put their money in escrow while their I-526 is processing may have to forgo that option if the bank does not approve Bitcoin as a legitimate source.
  • Mona recently spoke with leadership at Signature Bank, one of the largest banks for EB-5, and while they do not currently accept cryptocurrency, their regulators are examining the possibility. (Banks must follow strict regulations to avoid serious consequences.)
  • A potential EB-5 investor could cash out a transfer in the U.S. and wire the money elsewhere, which theoretically would facilitate that money going into escrow at a bank. However, for EB-5, the source of funds has to come from the personal account of the investor. It does not suffice if the money is remitted directly into a project.
  • USCIS would deny cryptocurrency if there was any evidence of money laundering, but Bitcoin leaves a paper trail disclosing the detailed path the funds take. CrypBrokers ensures that the identification matches at every juncture.

 

Click here to access the podcast episode

 

About the Author:

Hermione Krumm, Esq. is an associate attorney with Mona Shah & Associates. Hermione works with EB-5, corporate, merger and acquisition (M&A), intellectual property and foreign direct investment (FDI) matters involving China, the UK and the US. Hermione received her LL.B. (Hons) from the University of Manchester School of Law (UK), and obtained her LL.M. from Cornell Law School. Hermione speaks fluent English, Mandarin and Cantonese.

Podcast is a digital radio which the audience can easily stream and download to their computers and mobile devices. The audience can also subscribe to their favorite channels to automatically receive new episodes of their favorite shows. EB-5 Investment Voice is Mona Shah and Associates’ series of podcasts devoted to providing insights into the Immigrant Investor Program for foreign investors, domestic fundraisers and enterprising entrepreneurs. Tune in to our latest episodes at https://mshahlaw.com/podcast/!

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