Bitcoin has taken the world by storm over the last decade, a fact that is difficult to dispute, even by skeptics. There has been a fairly consistent rise in the currency’s value and popularity since its inception. Following Bitcoin’s initial popularity, several other digital currencies started taking form, thus giving rise to the term ‘cryptocurrency’ or just ‘crypto’.
Simultaneously, several types of Citizenship by Investment (CBI) and residency programs were adopted across the world, finding a ready market in high net worth individuals who wanted to obtain a second passport. Citizens of a country with ‘weaker’ passports are able to invest in real estate, an approved fund, or make a donation, in exchange for permanent residency or second citizenship. This brings with it a combination of benefits like easy business processes, attractive tax regimes, visa-free travel, and a better life overall
As a rule of thumb, it has traditionally not been possible to directly pay for citizenship with bitcoin or any other cryptocurrency. However, it is possible to convert cryptocurrency into the Fiat currency of a particular country, after which, the monies may be transferred offshore for any citizenship by investment process.
There are exceptions, however, and at present, Vanuatu and El Salvador both have citizenship or residency by investment programs that allow payments through Bitcoin.
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Citizenship can only be bought with Bitcoins in Vanuatu while only residency can be obtained in El Salvador through cryptocurrency. In both cases, the investor must make a donation to the Government, which can be with crypto (bitcoin).
The crypto-friendly Pacific country has now created an attractive opportunity for holders of bitcoin to essentially buy second citizenship in their country. Vanuatu offers citizenship for a donation of US$130,000 per single applicant. Additionally, the application fee can go up to US$15,000 per couple.
All fees for the CBI process can be made by bitcoin to an authorized agent of the program, which in turn pays the government in fiat currency, making it convenient for international bitcoin holders who are looking to buy citizenship or a second passport.
It is worth noting the nation boasts one of the best passports you can obtain through investment, offering visa-free travel to more than 120 destinations worldwide including the Schengen Zone.
It is also a great destination for those worried about taxes, as non-residents of the archipelago nation are not required to pay tax and there are a lot of taxes that are exempted.
On June 9, 2021, the Government of El Salvador released a bill making Bitcoin legal tender, and offering residency to those who invest in Bitcoin in El Salvador.
In fact, El Salvador is the first and only country to date that allows its citizens to use Bitcoin for most transactions.
Antigua and Barbuda is considered to have a cheap, but strong passport with visa-free travel to over 130 countries. In addition to visa-free access, the program has grown in popularity due to its tax-friendly structures.
The country has no capital gains, inheritance tax, income tax or wealth tax on worldwide income or assets.
Of late, Antigua and Barbuda has been working towards accepting payments for their citizenship by investment program in bitcoin. If the bill is passed, the island nation will be the first Caribbean country to offer a cryptocurrency as a mode of payment in exchange for citizenship.
In the case of countries that do not directly accept a digital currency for their CBI programs, it is usually possible for investors to convert their cryptocurrencies into Fiat currency and then pay the desired amount for their citizenship or residency.
However, depending on the country’s CBI program which the investor intends to invest in, converting bitcoin in Fiat currency may not be permitted as the “source” of funds must be acceptable for the program’s eligibility.
Malta & Portugal, both with robust residence programs are crypto-friendly and are poised to allow cryptocurrency investments in the future.
Any country’s CBI process mandates that applicants must prove the legality of their money. Simply showing digital coins in the form of cryptocurrency is not enough to prove that the source of these assets can be considered as ‘legal’.
Most countries that are willing to accept payments in a Fiat currency will want to first establish whether the investor has initially earned their income legally. This can be difficult to ascertain, however, the investor must be able to confirm the legality of the money which was used to buy the cryptocurrency and the price at which the currency was sold.
While it is unclear exactly what documentation will be accepted by migration authorities in different countries to determine the legality of an investor’s cryptocurrency, there are a few processes that may provide sufficient evidence in proving legality:
Vanuatu offers applicants the opportunity to obtain a second passport in their country for a minimum donation of US$130,000 per single applicant.
Holders of this citizenship allow applicants to live and work in the country, however, voting rights and holding a political position are restricted.
The Government of Vanuatu has been a pioneer in accepting payments for citizenship via bitcoin:
This option is open to applicants from all countries around the world, except for citizens of Syria, North Korea, Yemen, and Iraq.
While the Vanuatu CBI process is directly involved with bitcoin for purchase into their citizenship by investment program, there are ‘better’ options for applicants to look at if they are bitcoin traders. Although the direct investment of bitcoin into a country’s CBI program is still not common practice, there are ways to obtain second citizenship for those investors who would choose to use their crypto assets.
The Caribbean Islands comprise 13 different Island Nations, of which, five offer Citizenship by Investment or Residence Programs- St Kitts & Nevis, Antigua and Barbuda, Dominica, St Lucia, and Grenada. Most of these Caribbean nations have tax-friendly cryptocurrency laws.
These programs do not allow payment directly in crypto; however, it is possible to pay for citizenship with cryptocurrencies via a third-party sponsor. In this case, the sponsor may pay for the applicant’s citizenship in USD, and in return take their payment from the applicant in bitcoin.
Amongst all, the two programs that stand out are St Kitts & Nevis, and Grenada.
St Kitts & Nevis has made a new amendment to their program where investors can purchase real estate of their choice, with a minimum investment of US$400,000.
On the other hand, the Grenadian government grants passports to investors for either a US$150,000 donation, or a real estate project at a cost of at least US$220,000. Grenadian passport holders are eligible for an E-2 visa in the United States. This visa is exclusive to certain countries and allows investors to live and work in the United States in exchange for a minimum investment of US$100,000.
Interested in obtaining carribean citizenship with Bitcoin?
Yes, Vanuatu and El Salvador both have CBI programs that allow payment through bitcoin. Prior to this, it was not possible to buy citizenship with bitcoin or any other cryptocurrency.
Vanuatu is unique with a structured process that almost directly facilitates payment in bitcoins for their citizenship by investment programs. El Salvador, on the other hand, is the only country to allow the use of Bitcoin as legal tender.
Most countries are still in the nascent stages of determining the regulations surrounding crypto. However, an increasing list of nations permit the use of cryptocurrencies and recognize the corresponding accounts. Conversely, Russia, China, India, and several South American countries consider any transaction with crypto to be illegal.
There are several countries that have a generally positive stance towards cryptocurrency, that can be considered crypto-friendly, including the United States, Canada, Australia & some EU countries like Portugal and Malta. However, for tax purposes, most countries consider cryptocurrencies as assets that are subject to capital gains. Portugal and Malta are both tax-efficient for cryptocurrencies.
There is no one answer to fit this question – it depends on the requirements of the crypto investor. However one can consider the following while selecting a second passport
A ‘good’ citizenship for crypto investors could be found in Portugal and Malta, with ease for doing business, attractive tax rate, and high quality of life. Portugal and Malta do not tax capital gains on any crypto. However, citizenship in Malta and Portugal are not as easy to obtain as some of the other Caribbean countries. Portugal has a residency requirement of seven days a year for five years, whereas Malta has a higher minimum investment requirement. That being said, there is no need to hold a Portuguese passport in order to obtain the cryptocurrency tax advantage. Temporary & permanent residents in Portugal are entitled to the same tax exemptions for cryptocurrency that is bought and sold in Portugal.
However, if the investor wishes to become a citizen by paying the CBI fees in cryptocurrency, then Vanuatu may be the best option
Lastly, if the crypto investor wants to pay taxes, purchase assets, and perform other day-to-day transactions while living life as a resident, then El Salvador – being the only country in the world that accepts Bitcoin as legal tender, would be the best fit.
Vanuatu allows foreign nationals to obtain citizenship in their country for a minimum donation of US$130,000 per single applicant.
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