For cryptocurrency investors in the US, life has gotten tougher of late.
In June, the SEC filed lawsuits against the two largest cryptocurrency exchanges, Coinbase and Binance, accusing them of selling unregistered securities.
In response, Binance announced that it would suspend US dollar deposits and withdrawals, simply becoming a crypto-to-crypto exchange. Effectively, this means that there is no way to liquidate your assets and convert them into spendable currency on Binance.
Under these circumstances, it is reasonable for US-based cryptocurrency traders and investors to wonder:
“Is the grass greener in other places?”
In other words, if you did not live in the United States, or if you had residence or citizenship in another country, would you enjoy more favorable conditions for investing and trading cryptocurrencies?
Well, that depends.
The response of governments to the regulation of cryptocurrencies varies greatly around the world.
In 2019, China made global headlines when it completely banned cryptocurrency trading. (Although, the country still allows some debts to be settled in crypto.)
Several other countries (including Egypt and Morocco) have also banned cryptocurrencies entirely.
On the other end of the spectrum… in 2021, tiny El Salvador created quite a stir by becoming the first country to make Bitcoin legal tender. It has since been joined by the Central African Republic.
My point is that the response that traders of cryptocurrencies and their digital assets receive varies greatly from country to country. It goes without saying that simply searching anywhere outside of the US is not a solution.
Recently, the Micronesian island of Palau has been advertising a program that would give you “digital residency” there for a year for $248, without the need to be present in the country.
Some cryptocurrency traders and investors have wondered if a program like this, “digital residency” in another country, could allow them to circumvent increasingly strict crypto rules at home.
I have been researching foreign residencies and second passports for over 30 years, and in my opinion, if a residency option sounds too easy or too good to be true, it usually is.
In fact, the Wall Street Journal reports that while Binance founder Changpeng Zhao initially expressed support for the Palau program, Binance halted any further association after “conducting due diligence.”
Between an outright ban vs. a hardcore embrace, China’s choice for cryptocurrencies vs. El Salvador’s choice, the US is currently somewhere in the middle.
Just two weeks after the SEC filed its lawsuits, Fed Chairman Jerome Powell told the House Financial Services Committee that “cryptocurrencies appear to have staying power as an asset class,” resulting in in a price spike.
Insiders in the crypto industry have been calling for comprehensive regulation for some time. This would give their assets and platforms clear guidance and legal limits, they say.
In this sense, the European Union is far ahead of the United States.
The EU Markets for Crypto Assets (MiCA) regulations, approved 517 to 38 by the European Parliament in April and officially signed into law in May, is the world’s first comprehensive set of crypto regulations.
The law allows for the licensing of cryptocurrency exchanges and imposes certain requirements around customer authentication and data retention. It has been widely endorsed by the crypto industry.
So should American crypto investors consider moving to Europe?
Whether you are a cryptocurrency investor or not, the lifestyle in many parts of Europe is second to none. 300+ days of sunshine in Portugal’s Algarve… the simple, laid-back pleasures of Greek island life… or be a pioneer and settle somewhere like Montenegro, which is actively seeking to become a blockchain hub .
A previous Montenegrin Prime Minister even recommended that Ethereum
Among the countries of the European Union (Montenegro is not yet part of the EU, although it is working towards membership in the next decade), Spain, Portugal and Malta are among the most interesting for cryptocurrency enthusiasts.
Malta was dubbed “Blockchain Island” after passing laws to encourage crypto activity in 2018, including establishing a Digital Innovation Authority. The historic capital of Portugal, Lisbon, hosts the annual Web Summit, as well as frequent crypto events. Lisbon was named in a recent survey of founders (by investor firm Greenfield) as the crypto capital of the world. And Spain just launched a new visa to attract tech types and digital nomads.
“Digital nomad” visas are one way to go if you are seeking residency abroad. A large number of countries, including several European countries (Portugal, Spain, Greece), have launched them in the wake of the pandemic. They are designed to encourage remote workers to relocate for a period of a year or more.
Many countries in Europe also offer “passive income” visa options. If you can show that you have a certain level of income outside the country (pension, dividends, etc.), you will be granted residency. The minimum income required can be as low as €1,200 per month (Portugal) or as high as $50,000 per year (Ireland).
Some European countries continue to offer so-called “Golden Visas”, in which an investment in the country will entitle you to live and work there. In Malta, if you buy €350,000 worth of property (or €300,000 in low-income areas of Malta or on the sister island of Gozo), you can get permanent residence. In Greece, a real estate investment of €250,000 (or €500,000 in Athens or the popular tourist islands) will earn you a Golden Visa.
Residence in the European Union is a valuable asset, especially as it can lead over time (after several years of residence) to a second citizenship and an EU passport. If you have a European Union passport, you have a permanent right to live and work in any of the 27 countries.
My husband and I have dual citizenships (American and Irish). A second passport is, in many ways, the ultimate “backup plan” for your lifestyle. It gives you another country you can escape to (or multiple countries, in the case of an EU passport) if you don’t like how things are going back home… as crypto investors may be thinking right now.
There are also other benefits of having a second passport. For example, Americans will soon need a visa again to enter Brazil. But Europeans will continue to have visa-free access to Brazil. Therefore, a second passport can give you visa-free access to more countries, saving you the hassle and time of applying for a visa.
It can also help you avoid travel restrictions. For example, during the pandemic, Americans were banned from traveling to Europe and vice versa. But since my husband and I both held European and American passports, these rules did not apply.
There are three routes to obtain a second passport. The first is naturalization: obtaining residency somewhere and spending enough time in that country to be eligible for citizenship.
The second is through ancestry. This is a route that is open to many Americans. For example, if you have an Irish or Italian grandparent (or even a great-grandparent), and you can prove when and where you were born and your ancestry, you could be entitled to European citizenship, without having to spend a lot of time in Europe (or spending a lot of money). .
A third route to a second passport is the citizenship-by-investment programs offered by various Caribbean island nations. A donation, business investment, or purchase of property (usually a couple hundred thousand dollars) on islands like St. Kitts and Nevis, Antigua and Barbuda, Dominica, Grenada, or St. Lucia can entitle you to a passport and citizenship.
Although sometimes controversial (you are “buying citizenship”), these Caribbean programs are an established and legitimate route to obtaining a second passport. In fact, the US government recognized it much earlier this year, following a roundtable meeting with five Caribbean citizenship-by-investment jurisdictions, with a declaration stating that the programs “provide a legitimate service and have aided the survival of participating economies.”
At least a website is promoting these Caribbean passports for bitcoiners on the grounds that cryptocurrency enthusiasts naturally distrust the government, so a second citizenship means you’re not beholden to just one government. You have “decentralized” your life. You have options.
I am all for giving you more options in life. After all, that’s the only reason to look abroad for alternatives to your current lifestyle or investment portfolio.
In short, a foreign residency or second passport makes sense, whether or not you’re concerned about the recent US government crackdown on cryptocurrency.