VALUE OF CRYPTOCURRENCIES
IS HIGHLY SPECULATIVE
The value of bitcoin, and other digital currencies, can
change drastically, and while current trends with bitcoin
have seen a rapid increase in value, a drop-in value
before the investor is able to exchange it to U.S. dollars
would reduce the investor’s capital funds to below the
minimum required EB-5 investment amount.
COST OF CRYPTOCURRENCY MAY
BE HIGHER FOR GOVERNMENT
CONTROLLED CURRENCIES
international digital currency exchanges. While this rule did
not outright ban the ownership or use of bitcoin and other
digital currency in China, it essentially ended the ability
of individuals who do not already own digital currency to
purchase or exchange the local currency through formal
cryptocurrency exchanges.
The market reacted to this government regulation by
increasing the trading volumes of over-the-counter
markets and direct peer-to-peer trading platforms such as
local bitcoins. 4
The local and global bitcoin market was able to work
around the Chinese government’s restrictions. Faced with
this reality, the Chinese government has indicated that it
will likely resume cryptocurrency trading and exchanges
by implementing a licensing program that will allow them
some oversight of the market.
It is not clear how this oversight will impact digital currency
trading, but the market has clearly demonstrated a
remarkable ability to operate and thrive at the global level
irrespective of individual country restrictions. There are
also other issues and concerns with the use of bitcoin, and
other digital currencies, separate from country-imposed
restrictions, that could impact an EB-5 investor’s ability
or willingness to use it to exchange and transfer funds.
Some of these issues include the fact that the:
Aside from being a volatile market with fluctuating
values for digital currencies, there are often additional
costs involved due to the conversion and exchange
rate for currencies. With respect to the conversion
of the Chinese RMB/Yuan to bitcoin, there may be a
different or higher exchange rate than the government
controlled exchange rate of Chinese RMB to a
traditional country currency (fiat currency). This is a
result of the value of bitcoin and other digital currencies
not being tied to or impacted by the value of any local
currency and government controls that may be placed
on that currency, but rather set by the supply and
demand forces of the international market.
LIMITS ON THE AMOUNT OF
BITCOIN THAT CAN BE
PURCHASED AT ONE TIME
Many of the exchanges, including the top exchanges
in the United States, limit the amount of bitcoin an
individual can buy on any given day or any given week.
In New York, the maximum amount of bitcoin that can
be purchased in a week is $8,000. At its current value,
this translates to only one bitcoin per week. Such
purchase limitations would greatly restrict an EB-5
investor’s ability to exchange the equivalent of $550,000
in a reasonable time frame.
THE FUTURE OF DIGITAL CURRENCIES
While the use of digital currencies is still a very
small part of the global financial flow of funds, it is
without question, a rapidly growing means of effecting
financial transactions. More and more, individual
businesses have started to recognize both the value
and the importance of this global form of currency,
with leading companies such as Microsoft, Expedia
and PayPal already accepting bitcoin as payment for
the purchase of products and services. Many markets,
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