US based LLC + French partners offshore structure to legally trade on FTX, Binance, OKX, Bybit, etc.

[maddrixclub]

Hi all -
Three of us (myself, a family member and a friend) own and operate our respective individual businesses by trading crypto.

Before the KYC requirements, everything was easy and legal, now it is becoming harder to trade as individuals (mostly for me as being a US resident). Both friend and family member are in France so less KYC restrictions.

We are looking to partner up and create a foreign entity that would allow us to legally trade and KYC as an institution on the major exchanges (FTX, Binance, OKX, Bybit, etc.).
The goal is not tax evasion. The goals are to be able to use these exchanges and not being at risk of locked up funds due to KYC problems.

Which countries do you recommend with this "international group"? We are looking into BVI, Belize, any other recommendations?

I am guessing the French ones need to to be the UBO's / Directors, and I would be a simple nominee? Any advice, feedback or remarks is more than welcome.

Thanks !

 

[Sols]

BVI might be a pretty good fit for this, assuming the plan is for just the three of you to take joint decisions on how to trade crypto and then split the profits between yourself. I.e., you will not be taking deposits from anyone else.

Normally, people form a BC (Business Corporation) when they set up in BVI and in most cases that's the right choice. But this might be one of those cases where some form of partnership is better. You can then arrange your roles differently so that you have less day to day control but still get a 1/3 share of the company's profits.

Cayman Islands could also work.

Speak with Conyers, Carey Olsen, and maybe Ogier.

Another possibility would be Isle of Man (a Limited Partnership) and registering with the local FSA. That's not the same as getting a license. It's somewhere between being licensed and being unlicensed. That might help with KYC when approaching exchanges.

 

[Jerry1911]

@Sols why not a simple UK LLP or even a Limited Partnership?

 

[Sols]

@Sols why not a simple UK LLP or even a Limited Partnership?

Yes, that could also work. No drawbacks come to mind.

There are lot of options here.

Just make sure a good lawyer drafts the partnership agreement.

 

[maddrixclub]

@Sols Thank you very much.
If you have any recommendation for BVI companies to get started, I'll gladly take it.
I read that Cayman Islands does not allow Binance anymore ... So I thought this one was out of the list.

I am confused about the license part : Isle of Man would require a license? (like to trade?) BVI would not?

Edit: I forgot to ask - being 33% owners into this business as a US resident, would not create KYC problems at all?

Thanks again

 

[Sols]

If you have any recommendation for BVI companies to get started, I'll gladly take it.

The three service providers I mentioned have — IIRC — experience with crypto-related activities and have offices in BVI.

I am confused about the license part : Isle of Man would require a license? (like to trade?) BVI would not?

No, but you can register as a "designated business" which is like voluntarily submitting to a tiny bit of regulatory oversight. In return, you can show anyone asking that you are registered with an FSA. It's nothing like having a license.

You can submit voluntarily to a lot of financial service authorities but the Isle of Man FSA is especially well equipped and experienced with it, especially when it comes to crypto.

Edit: I forgot to ask - being 33% owners into this business as a US resident, would not create KYC problems at all?

It will but there's really no way around it. At 33% ownership, you will be a UBO and be reported. You can't get around it by presenting a nominee, unless you start lying and claiming that you aren't the UBO. That's a slippery slope that can really backfire if/when caught.

With a partnership, you can structure it so that you have very little control but still get 33% of the company's profits. It's similar to how corporations can have preferred stock, regular stock, and/or different series of stocks with different rights. For partnerships, it's on a smaller scale usually and much more flexible. You will still have to be KYC'd, though, so if an exchange rejects applicants with anyone involved being a US person, this wouldn't work.

Your two partners could set up a company, own it 50/50, and then have a 33% revenue sharing agreement with you. It could be commission for trade insights, for example. Then at the end of the day, you each get 33%. Your partners could at any moment terminate the agreement and kick you out. It also wouldn't explain how you put money into the company in the first place. Unless you give funds to the partners prior to incorporation as a gift between friends, and they then use that as a portion of the funds they put into the company. — Something like that can work but is fraught with its own issues.

 

[maddrixclub]

@Sols Apologies I missed the line with the 3 reco.

Thanks a lot for the details, it is very clear.

Appreciate the help here.

 

[vroess]

I’m also looking into to this but just for myself.

I have spoke with several places and received varying information.

These options were presented by lawyers - claimed on their website - so DYOR and ensure accuracy with CPA as well. And a lawyer you trust. Lol

Have a holding company owned by non-USA person(s), that holding company will own the trading firm (LLC) and I will be a broker for LLC but paid a salary by holding company. So I don’t have to file all the trades.

There’s also a thing I came across called the Cayman/LLC sandwich. The way I understood it in simple terms: It’s used to protect international investors from US tax reporting when co-investing with US residents. US LLC and offshore LLC both invest into holding company. Holding company does the investing and returns profits.

Keep in mind you could move to Puerto Rico.

I will speak with CPA & Tax Advisor to see what I can come up with because I do keep hearing that Global exchanges shy away from US residents for tax reporting reasons.

Something I can’t seem to wrap my head around is everyone saying that getting a bank account for crypto trading/firm is hard. But I see article after article saying Swiss, Singapore, Hong Kong, etc are all crypto friendly. Researching that now.

• Is it really that hard if you have your documentation?
• Does the jurisdiction matter in terms of getting a
  • corporate bank account
  • corporate crypto exchange account (Binance et al)

Example: Get a Vanuatu or Marshall Island LLC (cheap and least maintenance), Swiss business account, and Binance institutional account.

Does Switzerland or Binance have issue with certain offshore jurisdictions (not in regard to exchange regulatory licensing) and, if so, how do I know which jurisdictions are problematic?

Understood Vanuatu has faced some issues but is this crazy to think or something?

I did come across something interesting – virtual business account by Statrys. Available to Hong Kong, Singapore and BVI. Takes multiple currencies payments and you can send out payments. Costs $11 US/month but no minimums. Asked about their ability to work with crypto exchanges and waiting to hear.

License. I was told same thing @Sols said: Prop trading (Proprietary) meaning your business funds, not from external sources like investors or the public, does not require a license.

 

[vroess]

I forgot to mention that in first example, not Cayman/LLC sandwich, you would create US LLC to receive payments from Holding company. Not direct personal payments.

 

[menzu]

You will need a business bank account for USD funding as well, that’s usually the challenging part with offshore companies.

Or do you plan on using USDT and stablecoins as an alternative?

 

[vroess]

You will need a business bank account for USD funding as well, that’s usually the challenging part with offshore companies.

Or do you plan on using USDT and stablecoins as an alternative?

Looked at your website and supported countries but no BVI, Cayman, etc. Any idea if you will add offshore entities?
Personally, I will go to fiat for salary.

I did come across something interesting – virtual business account by Statrys. Available to Hong Kong, Singapore and BVI. Takes multiple currencies payments and you can send out payments. Costs $11 US/month but no minimums. Asked about their ability to work with crypto exchanges and waiting to hear.

Statrys does NOT work with crypto companies.