Best jurisdiction for crypto HFT business

[1finedev]

Hello,

I am a Russian citizen running HFT trading operations on crypto exchanges for quite some time now. I have been out of the country traveling for more than 183 days each year making me not a tax resident in Russia. With the current Russian legislation and the recent crackdown on crypto I'm thinking about doing everything properly: completely moving outside Russia, establishing an office in some country, hiring people, growing the business.

What I currently have:

- Grenadian passport with proof of address
- Portuguese golden visa allowing to live in the EU
- Bank in the Bahamas that accepts my crypto withdrawals (however, the fees are really high)
- I am currently trading as a Russian citizen on most of the crypto exchanges
- Almost all my funds come from profits from crypto trading
- There is no proof that this money was made trading crypto, there was never proper bookkeeping in place, some of the trading accounts have been closed
- The only potential proof I have is reference letters that I can get from account managers at crypto exchanges and screenshots that show high trading volumes
- The money is legal, no shady stuff going on
- I am ready to pay taxes if needed
- I would like to avoid setups where my worst-case scenario is the government confiscating the money or putting me in prison. Even if the possibility is very low
- We are talking about substantial volumes, it is very likely that they can trigger tax authorities audit and may draw their attention


I am looking at different options for setting this up. They are:

1) UAE company + UAE residency + UAE bank
2) BVI + traveling + some crypto bank
3) Cyprus company + tax residency + some crypto bank
4) Estonia company + tax residency + some crypto bank
5) Portugal company + tax residency + some crypto bank

I think that if I go to a jurisdiction that requires financial statements to be filed at the end of the year, rather high numbers will draw the attention and the authorities will start investigating. And even though I haven't done anything illegal, I won't be able to prove the source of all my funds.

This is why at this point I am thinking that jurisdiction with no filing requirements like BVI would be best for my situation. I can start doing my own bookkeeping and maybe audit and after a couple of years will have rather clean money that I will be able to explain as trading profits. However, this option doesn't really work well if I want to grow my team and open an office in a reputable jurisdiction.

I also have a potential partner that is not related to me, that I fully trust and that could also take part in setting this up (for example, one person holds a trading company offshore and one person holds an operating company onshore).

I would be grateful for any advice on this matter.

I would appreciate it if you could suggest what would be the worst-case for me in these jurisdictions if the government comes at the end of the year and I can't explain my source of funds (fine, closure of the company, confiscating of funds, imprisonment or potentially all of the above).

I am ready to pay taxes, just not ready to potentially lose the money or go to prison just because I didn't do the proper bookkeeping.

Thanks!

 

[CyprusLaw]

1finedev said:
Hello,

I am a Russian citizen running HFT trading operations on crypto exchanges for quite some time now. I have been out of the country traveling for more than 183 days each year making me not a tax resident in Russia. With the current Russian legislation and the recent crackdown on crypto I'm thinking about doing everything properly: completely moving outside Russia, establishing an office in some country, hiring people, growing the business.

What I currently have:

- Grenadian passport with proof of address
- Portuguese golden visa allowing to live in the EU
- Bank in the Bahamas that accepts my crypto withdrawals (however, the fees are really high)
- I am currently trading as a Russian citizen on most of the crypto exchanges
- Almost all my funds come from profits from crypto trading
- There is no proof that this money was made trading crypto, there was never proper bookkeeping in place, some of the trading accounts have been closed
- The only potential proof I have is reference letters that I can get from account managers at crypto exchanges and screenshots that show high trading volumes
- The money is legal, no shady stuff going on
- I am ready to pay taxes if needed
- I would like to avoid setups where my worst-case scenario is the government confiscating the money or putting me in prison. Even if the possibility is very low
- We are talking about substantial volumes, it is very likely that they can trigger tax authorities audit and may draw their attention


I am looking at different options for setting this up. They are:

1) UAE company + UAE residency + UAE bank
2) BVI + traveling + some crypto bank
3) Cyprus company + tax residency + some crypto bank
4) Estonia company + tax residency + some crypto bank
5) Portugal company + tax residency + some crypto bank

I think that if I go to a jurisdiction that requires financial statements to be filed at the end of the year, rather high numbers will draw the attention and the authorities will start investigating. And even though I haven't done anything illegal, I won't be able to prove the source of all my funds.

This is why at this point I am thinking that jurisdiction with no filing requirements like BVI would be best for my situation. I can start doing my own bookkeeping and maybe audit and after a couple of years will have rather clean money that I will be able to explain as trading profits. However, this option doesn't really work well if I want to grow my team and open an office in a reputable jurisdiction.

I also have a potential partner that is not related to me, that I fully trust and that could also take part in setting this up (for example, one person holds a trading company offshore and one person holds an operating company onshore).

I would be grateful for any advice on this matter.

I would appreciate it if you could suggest what would be the worst-case for me in these jurisdictions if the government comes at the end of the year and I can't explain my source of funds (fine, closure of the company, confiscating of funds, imprisonment or potentially all of the above).

I am ready to pay taxes, just not ready to potentially lose the money or go to prison just because I didn't do the proper bookkeeping.

Thanks!
Click to expand...

Hi,

I will speak for the Cyprus option, noting that a lot of crypto-traders have relocated recently to Cyprus due to the attractive tax regime. I also note that the Cyprus authorities are trying to become more and more crypto-friendly.

In Cyprus you can become a tax resident provided that (a) you spend 60 days in Cyprus; (b) not more than 183 days in another jurisdiction; and (c) you are running a business in Cyprus.

Carrying out your business through a Cyprus company would mean 12.5% corporate tax plus 2.65 GHS contribution on dividends.

The trading under the company would be recorded in the accounting and audit of the Cyprus company and therefore there would be no issues with the authorities. Please note however that Cyprus companies have the obligation to file financial statements each year (with the first ones being 18 months from the incorporation of the Company).

With respect to banking, even though Cyprus banks are not crypto-friendly - yet - we have solutions with EMIs and foreign banks, with quite reasonable fees that onboard Cyprus companies with crypto-related activities.

Happy to PM you if you would like to discuss this more.

 

[1finedev]

CyprusLaw said:
Hi,

I will speak for the Cyprus option, noting that a lot of crypto-traders have relocated recently to Cyprus due to the attractive tax regime. I also note that the Cyprus authorities are trying to become more and more crypto-friendly.

In Cyprus you can become a tax resident provided that (a) you spend 60 days in Cyprus; (b) not more than 183 days in another jurisdiction; and (c) you are running a business in Cyprus.

Carrying out your business through a Cyprus company would mean 12.5% corporate tax plus 2.65 GHS contribution on dividends.

The trading under the company would be recorded in the accounting and audit of the Cyprus company and therefore there would be no issues with the authorities. Please note however that Cyprus companies have the obligation to file financial statements each year (with the first ones being 18 months from the incorporation of the Company).

With respect to banking, even though Cyprus banks are not crypto-friendly - yet - we have solutions with EMIs and foreign banks, with quite reasonable fees that onboard Cyprus companies with crypto-related activities.

Happy to PM you if you would like to discuss this more.
Click to expand...

Hi, thanks for your valuable input. I have send you a PM

 

[Fred]

@1finedev received your PM and send you an extensive response shortly

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