EB5 Investors Magazine "Top 25 Awards Edition" Volume 8 Issue 1 - Page 18

commercial enterprise, proposed by Zhang makes the task of documenting the source of funds for crypto traders more manageable. CRYPTOCURRENCY TRADE REMAINS CHALLENGING TO DOCUMENT Among all sources of funds that are legitimate but extremely difficult to document, cryptocurrency trade is by far the most challenging, both for legal practitioners and USCIS adjudicators. Due to the complexity of the concept and non-conventional path of funds, USCIS is yet to develop a predictable and reasonable approach to the cases involving trade of digital assets. However, there is a hope that under Biden’s administration agencies will become more crypto savvy and adapt to the realities of modern economies. the investment enterprise. The court recognizes that in adjudication of EB-5 cases, USCIS verifies compliance with the requirements that serve valid government interests – preserving the integrity of the EB-5 program by confirming that the funds utilized are not of suspect origin. 10 However, within that policy, Zhang crafted an argument for legitimacy of the funds even if there is a “gap” in the history of trade between the third party and the investor. The court observes that provisions of C.F.R. focus “on the exchange between the foreign investor <…> and the new U.S. enterprise”, rather than “on any prior exchange between the investor and his source of funds.” 11 In the context of cryptocurrency trade, the gaps in the chain of transactions are almost inevitable. Cryptocurrencies are stored in digital wallets that are essentially software or apps installed by users. They do not have traditional authentication attributes, such as name, account number or tax ID of the holder. Consequently, the best way to convince skeptical (and oftentimes not versed in technology) USCIS adjudicators that th e fu nds tr ansi tio ne d fro m sou rc e to sou rc e legitimately is by presentation of collateral evidence, such as investor’s professional profile, level of income, record of conventional bank transactions reflecting original purchase of cryptocurrencies or mining equipment, and tax payments on capital gain realized at the sale of cryptocurrency. It appears that the shift in focus from the relationship of the investor with third parties in the process of accumulation of the capital, to contribution of the “cash value” to the Recently, the Senate Committee approved for the Chairman of the Securities and Exchange Commission a Presidential nominee Gar y Gensler, who has taught courses on blockchain and digital currencies at M.I.T. Zhang v USCIS coupled with the appointment of a candidate versed in blockchain technologies to lead the major regulatory agency provides a solid starting point for building a legal framework in this developing area. Natalia Polukhtin is the founder and principal at Global Practice, where she guides clients onemployment-based immigration. She specializes in investment immigrant and non-immigrant visa categories. Native of Russia, Polukhtin earned her graduate and undergraduate degrees from Moscow State University before obtaining a law degree from Mercer University School of Law. As an immigrant herself, Polukhtin successfully and effectively represents her clients throughout the immigration process by utilizing her foreign language skills and multicultural heritage. She is a blogger, speaker, consultant on investment immigration and an author of the first-ever comprehensive guide on business immigration to the U.S. in the Russian language. Sources: 1 Zhang v USCIS, No. 19-5021 (D.C. Cir. 2020), decided October 27, 2020 8 C.F.R. § 204.6(e) 3 TRW Inc v. Andrews, 534 U.S. 19, 28 (2001) 4 8 CFR §204.6(j)(3) 5 Colorado Digital Token Act, SB19-023 6 Iowa SB402 7 IRS Notice 2014-21; www.irs.gov/pub/irs-drop/n-14-21.pdf (last accessed March 15, 2021) 8 Zhang, at 13. 9 See USCIS Policy Memorandum (May 30, 2013) PM-602-0083 “EB-5 Adjudication Policy” stating that the preponderance of evidence “is a lower standard of proof than both the standard of “clear and convincing,” and the standard “beyond a reasonable doubt”. 2 "In the context of cryptocurrency trade, the gaps in the chain of transactions are almost inevitable" 10 Spencer Enterprise Inc v. U.S., 229 F. Supp. 2d 1025, 1040 (E.D. Calif. 2001) aff’d 345 F.3d 683 (9th Cir. 2003). 11 18 EB5 INVESTORS MAGAZINE Zhang, at 9.