Last Monday, the Parliament of Antigua and Barbuda amended the Citizenship by Investment Act, which will now accept cryptocurrencies and euros as payment for citizenship applications.
Prime Minister Gaston Browne expects the move to open up new markets and will help ease the so-called de-risking problem that has plagued Caribbean banks in recent years. The prime minister said citizenship payments would now be accepted in several additional currencies, in addition to US dollars, as is the case in most other Caribbean jurisdictions.
“So we are providing the ability to make payments not only in euros, but also using bitcoin and other cryptocurrencies,” Brown said, but also acknowledged that caution will need to be exercised when processing crypto payments.
Brown also pointed out that the program Antigua and Barbuda citizenship for investment will attract applications from the relatively untapped market of crypto millionaires. The prime minister told parliament that the change expands the market because there are many crypto investors who are eligible for citizenship but are only willing to pay in cryptocurrency. Removing such payments cuts off that market. To minimise the impact of exchange rate volatility, any funds received in cryptocurrency will be converted into US dollars daily.
It should be noted that Antigua and Barbuda citizenship is not the first passport scheme that can be paid for in cryptocurrency. Vanuatu passports are also available for investors who pay in Bitcoin, Ethereum and other similar instruments. However, Antigua and Barbuda will have the advantage that the government itself will accept crypto assets, while in Vanuatu, crypto payments can only be accepted by “lead agents”. They still have to convert the money into US dollars before paying the government. This distinction is important, not least because, unlike the Caribbean schemes, in Vanuatu, agents act as escrow holders. As a result, applicants for Vanuatu citizenship must pay the full amount to the agent, rather than waiting for a preliminary “approval in principle” as is the case with other passport programs.
Banking risk management
Another important change to Antigua's citizenship-by-investment laws is that the department will now be able to open offshore accounts to receive payments. The Brown administration hopes that this measure will also help improve the correspondent banking problem. Offshore accounts will allow funds to be received in jurisdictions that are not considered "toxic."
Caribbean jurisdictions suffer from the so-called de-risking efforts of US correspondent banks, which sometimes delay payments to and from the Caribbean for weeks or even months. On the one hand, to mitigate this problem, Caribbean countries can adopt cryptocurrency as a form of payment for their programs, which is what some “experts” in the global second citizenship by investment market are advocating. On the other hand, as Elma Global notes, there are other risks in this structure that are not entirely obvious at first glance. To be honest, the entire industry rests on several positions that may be fragile or vulnerable. Let us explain this thesis in more detail.
An excursion into history from the company "Elma Global"
The EU's tolerance for selling citizenship by investment has its limits. Who will need Antigua and Barbuda or any other Caribbean citizenship if the privilege of visa-free entry to Schengen is abolished? The answer is obvious: almost no one. Unlike the hastily-matured companies that have sprung up like mushrooms after the rain over the past 3-5 years, we have been in business for a long time and remember what it was like in 2008. Back then, there was absolutely nothing on the economic citizenship market except Dominica and St. Kitts and Nevis. Moreover, the liquidity of these passports was almost "banana". Citizens of St. Kitts and Nevis received visa-free access to Schengen in May 2009, which was a colossal breakthrough for a sharp increase in demand for this citizenship.
It is worth noting that while the authorities of St. Kitts and Nevis were harvesting the crop, they were selling citizenship by investment in the world market under conditions of a de facto monopoly, Dominica continued to be of almost no use to anyone until it signed an agreement with the European Union in 2015 to abolish visas for short-term trips. Incidentally, it should be noted that in the same year, in addition to Dominica, citizens of the following countries received visa-free access to the European Union: Saint Lucia, Grenada, Saint Vincent and the Grenadines, Vanuatu, Samoa, Trinidad and Tobago.
What is stopping the European Union from reconsidering its position? There have been precedents in history. In November 2014, Canada unilaterally revoked visa-free entry for citizens of St. Kitts and Nevis. There is a more recent example: in June 2017, Canada again unilaterally revoked visa-free entry for citizens of Antigua and Barbuda, and the pretext was the same as in the case of St. Kitts and Nevis - the existence of a citizenship by investment program in the country.
Citizenship for cryptocurrency – risks
Elma Global experts have nothing against cryptocurrency as such, but the risks to the sustainability of the second citizenship market will only increase. It is quite obvious that the United States does not like the existence of such passport schemes, which, unfortunately, are sometimes used to circumvent sanctions and other illegal activities. Of course, delays in payments sent for legitimate citizenship by investment programs cannot but irritate both applicants and the relevant Caribbean governments.
As noted above, under the pretext of checking clients or complying with anti-money laundering laws, US correspondent banks sometimes delay payments. It is unlikely that this is done intentionally, since there are more effective ways to dissuade neighbors from selling citizenship, but these delays can objectively accelerate the transition of Caribbean countries to crypto payments for citizenship.
This transition, in turn, may become a convenient pretext for the European Union to introduce visas for Caribbean citizens. In our opinion, the introduction of payments in cryptocurrencies carries a significant risk for countries with citizenship by investment programs to accidentally saw off the branch they are sitting on. The constant key factor here is the attitude of the European Union, and the variables are random factors, for example, some loud scandal in the press about the sale of citizenship to criminals or corrupt officials.
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Source: trn-news.ru
