WHY IS CRYPTOCURRENCY A
PROBLEMATIC SOURCE OF FUNDS?
Cr yptocurrencies generated through blockchain
technologies do not rely on government-regulated banks
or private financial institutions, which makes them an
attractive tool to accumulate value without revealing
identity of the holder. However, despite the numerous
significant changes in EB-5 industry, one component
of th e s u c c e s s f u l E B - 5 p e ti ti o n re m ai ns c o ns t a n t
– the requirement that the investment capital was
obtained lawfully and clearly attributed to the investor. 2
Accordingly, anonymity – the virtue that made blockchain
technology so popular for the exchange transactions
– is more a curse than a blessing when it comes to the
application in fields that traditionally rely on transparency
in representation, such as tax reporting or immigration
filings. Many immigration practitioners stay vary from the
cases where funds used for EB-5 or E-2 non-immigrant
visa investment originated from cryptocurrency exchange
or from generating the value through the process known
as “mining.” But does cryptocurrency really make that
source of funds documentation process that “cryptic”?
T he p rimar y reason for this c au tious at ti tude is a
concern that USCIS adjudicator may make an adverse
determination regarding legitimacy of funds simply due
to the lack of understanding of the novel technology and
accompanying regulations. Reluctance of immigration
services in reviewing cr yptocurrency as a legitimate
CAN PROPER DOCUMENTS BE
OBTAINED?
The assessment of whether a sale of cryptocurrencies can
substantiate a claim of legitimacy of funds always starts
with the law of jurisdiction where the investor conducted
the trade. The era of “Wild Wild West” in this sector of
economy undeniably comes to the end. There has been a
dynamic surge in regulatory efforts, with countries across
the globe taking a more serious and deliberate stance in
regulating production and trade of cryptocurrencies.
N a t u r a l l y, d o c u m e n t s o n o r i g i n a ti o n a n d t r a d e of
cr yptocurrency would not be available from the
countries where use of ‘quasi-money” is a subject to
the country-wide regulatory ban. For example, Algeria,
Bolivia, Morocco, Nepal, Pakistan, and Vietnam ban all
cr yptocurrency activities; Qatar and Bahrain prohibit
domestic cryptocurrency exchanges; and Bangladesh,
Colombia, Iran, Lithuania, Lesotho, and Thailand ban
financial institutions from facilitating transac tions
involving cryptocurrencies. 3 At the same time, it may
be difficult, but not impossible to identify the record
o r i g i n a te d i n t h e c o u n t r i e s w h e r e c r y p to c u r r e n c y
transac tions are allowe d or at leas t not expressly
prohibited.
Dif ferent jurisdic tions focus on various aspec ts of
g ove r n m e n t r e g u l a ti o n s , i n c l u d i n g t a x t r e a t m e n t ,
application of securities law, anti- money laundering
implications, and reporting requirements. As a result,
the “paper trail” for the acquisition and sale of Bitcoin
in Switzerland (the country with one of the most lenient
climate for cryptocurrency exchange in the world) may be
substantively different from the documents generated in
Russia (the country, where circulation of cryptocurrency
is not prohibited, but falls outside of the government-
prescribed reporting requirements.) 4 With understanding
of the status of digital asset trade in the par ticular
country, it is possible to “map” the process of conversion
of cryptocurrency into traditional payment instrument
through credible documentation.
• Proven track record in business immigration cases,
including EB-5, L-1, E-1 / E-2
• Result-oriented strategies for complex cases
and alternative visa solutions
• Successfully obtained 1,000+ green cards through
EB-5 program
• Providing independent investor-focused
representation to EB-5 immigrants
Robert P. Gaffney, Esq.
Certified Specialist in
Immigration & Nationality Law
Los Angeles Office
600 Wilshire Boulevard,
Suite 500
Los Angeles, CA 90017
(323) 407-8506
source of funds can also partially be attributed to the
fact that the U.S. SEC has already established a history
of denying applications to list Bitcoin exchange-traded
funds (ETFs), thus adding to the perception of the easily
manipulated and unregulated commodity. Nevertheless,
r e c e n t e x p e r i e n c e i n d i c a te s t h a t w i t h c o nv i n c i n g
documentation and detailed explanation of the underlying
transactions it is possible to successfully present the case
where proceeds from the sale of cryptocurrency were
used as a source of funds for the qualifying investment.
San Francisco (Main Office)
601 Montegomery St.
Suite 1114
San Francisco, CA 94111
(415) 989-1998
Visit www.usvisanet.com for more infomation
WHAT KIND OF EVIDENCE SHOULD BE
PRESENTED?
The key to successfully documenting source of funds
is to identify how cryptocurrency is classified within the
regulatory framework of the particular country (money,
asset, commodit y, etc) and look for the record that
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