EB5 Investors Magazine Volume 5, Issue 2 - Page 103

VALUE OF CRYPTOCURRENCIES IS HIGHLY SPECULATIVE The value of bitcoin, and other digital currencies, can change drastically, and while current trends with bitcoin have seen a rapid increase in value, a drop-in value before the investor is able to exchange it to U.S. dollars would reduce the investor’s capital funds to below the minimum required EB-5 investment amount. COST OF CRYPTOCURRENCY MAY BE HIGHER FOR GOVERNMENT CONTROLLED CURRENCIES international digital currency exchanges. While this rule did not outright ban the ownership or use of bitcoin and other digital currency in China, it essentially ended the ability of individuals who do not already own digital currency to purchase or exchange the local currency through formal cryptocurrency exchanges. The market reacted to this government regulation by increasing the trading volumes of over-the-counter markets and direct peer-to-peer trading platforms such as local bitcoins. 4 The local and global bitcoin market was able to work around the Chinese government’s restrictions. Faced with this reality, the Chinese government has indicated that it will likely resume cryptocurrency trading and exchanges by implementing a licensing program that will allow them some oversight of the market. It is not clear how this oversight will impact digital currency trading, but the market has clearly demonstrated a remarkable ability to operate and thrive at the global level irrespective of individual country restrictions. There are also other issues and concerns with the use of bitcoin, and other digital currencies, separate from country-imposed restrictions, that could impact an EB-5 investor’s ability or willingness to use it to exchange and transfer funds. Some of these issues include the fact that the: Aside from being a volatile market with fluctuating values for digital currencies, there are often additional costs involved due to the conversion and exchange rate for currencies. With respect to the conversion of the Chinese RMB/Yuan to bitcoin, there may be a different or higher exchange rate than the government controlled exchange rate of Chinese RMB to a traditional country currency (fiat currency). This is a result of the value of bitcoin and other digital currencies not being tied to or impacted by the value of any local currency and government controls that may be placed on that currency, but rather set by the supply and demand forces of the international market. LIMITS ON THE AMOUNT OF BITCOIN THAT CAN BE PURCHASED AT ONE TIME Many of the exchanges, including the top exchanges in the United States, limit the amount of bitcoin an individual can buy on any given day or any given week. In New York, the maximum amount of bitcoin that can be purchased in a week is $8,000. At its current value, this translates to only one bitcoin per week. Such purchase limitations would greatly restrict an EB-5 investor’s ability to exchange the equivalent of $550,000 in a reasonable time frame. THE FUTURE OF DIGITAL CURRENCIES While the use of digital currencies is still a very small part of the global financial flow of funds, it is without question, a rapidly growing means of effecting financial transactions. More and more, individual businesses have started to recognize both the value and the importance of this global form of currency, with leading companies such as Microsoft, Expedia and PayPal already accepting bitcoin as payment for the purchase of products and services. Many markets, EB5INVESTORS.COM 102