There are many people who invest in cryptocurrencies such as Bitcoin and Ethereum. You can buy and sell these cryptocurrencies using the cryptocurrency exchange in your country of residence.

Some people want to manage these cryptocurrencies in tax havens. A tax haven is a place where there are almost no taxes, and when you invest, you can make more money efficiently by using a tax haven.

However, when investing in tax havens using cryptocurrencies, the method is quite different from the usual way. So, you need to understand how to use offshore regions when investing.

First of all, you should not manage cryptocurrency assets in offshore regions. On the other hand, the right way to invest offshore is to use cryptocurrency to increase your assets in US dollars or Euros. I will explain how you can use tax havens for cryptocurrency investment.

Manage Your Cryptocurrency in Offshore Regions

There are a number of tax havens overseas, and you can open an investment account in these offshore regions. Even if you are a foreigner, you can open an investment account in an offshore region and manage your cryptocurrency.

Generally speaking, offshore investments refer to regular investments (mutual funds) and offshore life insurance. By starting a mutual fund in a tax-free area, your assets will grow efficiently. Also, if you buy life insurance sold in tax havens, you can manage your assets under better conditions than with life insurance in your home county.

In addition, in offshore investment, you can open an investment account and invest in funds around the world.

You can invest in stocks and bonds at a brokerage firm. On the other hand, with an offshore investment account, you can invest in any hedge fund in the world. For example, the following is a hedge fund with an average yield of 13.26% per year.

It is a low-risk hedge fund with no negative returns in any year, although the yield fluctuates from year to year. It is a fund that invests in mortgage loans, not in stocks or bonds, which makes it possible to manage assets with low risk.

In short, you can invest in all kinds of investment products, including hedge funds, with an offshore investment account. Therefore, you can also invest in cryptocurrencies, such as Bitcoin and Ethereum.

It Does Not Mean Using Foreign Cryptocurrency Exchanges

An investment account in a tax haven is not the same as an overseas cryptocurrency exchange.

There are many foreign cryptocurrency exchanges. Some of these cryptocurrency exchanges allow even foreigners to open accounts. For example, Binance is a very famous cryptocurrency exchange, and many people from all over the world have opened accounts with it.

However, managing cryptocurrencies in an offshore region do not mean using an overseas cryptocurrency exchange.

Foreign exchanges have the advantage of low fees and the ability to invest in many types of cryptocurrencies. However, only cryptocurrencies are available for investment. You cannot invest in stocks, bonds, and hedge funds using overseas cryptocurrency exchanges.

Therefore, it is important to understand that managing assets in tax havens is different from using foreign cryptocurrency exchanges.

Using an Offshore Bank in a Foreign Country Does Not Make Sense

Some of you may be thinking about using an offshore bank located in a foreign country. There are several banks that run businesses in multiple countries. Some of these banks do business in tax havens, and you can open a personal bank account with such banks.

For example, HSBC bank is a famous offshore bank and has branches all over the world.

However, there is no point in opening an offshore bank account. The fees for investment accounts are very high, and there is no way to invest in superior financial products.

An offshore bank is just a larger version of a megabank in your country, with the same banking functions. The nature of an offshore bank is, therefore, quite different from that of an offshore investment account. It does not make sense to use an offshore bank to manage your cryptocurrency.

Transfer Bitcoin or Ethereum and Invest in US Dollars

Open an offshore investment account with an insurance company (investment company) instead of a bank account in an offshore region. For example, below is a screenshot of an offshore investment account that I have opened.

In actual asset management, what you do is to open an offshore investment account and then transfer US dollars to the account. In the offshore investment account, you can invest not only in US dollars, but also in other currencies such as Euros, British pounds, Australian dollars, and so on. In my case, I invest in US dollars.

Instead of sending US dollars, you can also send cryptocurrencies to your offshore investment account. After opening an offshore investment account, the procedure for sending cryptocurrency is as follows.

  1. Ask your offshore financial institution to issue a wallet address.
  2. Send the cryptocurrency from your wallet to your offshore investment account.

In this way, you will be able to send cryptocurrency to your investment account and manage it.

Sending Cryptocurrencies as Investment Funds, Not for Purchase

Why do so many people use offshore regions to manage their cryptocurrencies? Offshore investment accounts have high fees, about 1% of the amount of assets in the account each year.

They also do not support a number of types of cryptocurrencies. Unlike cryptocurrency exchanges, offshore investment accounts only offer major cryptocurrencies such as Bitcoin and Ethereum, etc. Therefore, if you want to invest in cryptocurrencies, it is better to use a cryptocurrency exchange instead of an offshore investment account.

The reason why many people use offshore investment accounts for cryptocurrencies in spite of this situation is that after sending cryptocurrencies, they can be exchanged into US dollars or Euros and then invested in hedge funds.

As mentioned earlier, you can invest in financial instruments around the world by transferring your US dollars or Euros to an offshore investment account. If you have cryptocurrency at this time, it is easier to send cryptocurrency than cash.

Also, after converting cryptocurrencies into cash, leaving them in cash will not generate any money. Therefore, you can send the cryptocurrency to an offshore investment account, convert it into cash, and then invest it in a hedge fund to increase your money.

Compared to investing in cryptocurrencies, investing in hedge funds is less risky. Even a high-risk, high-return hedge fund has an annual interest rate of about 30%. For example, the following is a hedge fund with an average annual interest rate of 29.20%.

I have invested in this hedge fund, which will increase my assets by about 30 times in 14 years.

Investing in hedge funds will not make your assets grow 8 to 10 times in a year as cryptocurrencies do. Also, your assets will not drop by a tenth in a year.

So, if you want to increase your assets without fail, even if the yield is low, instead of high-risk assets like cryptocurrencies, you can send cryptocurrencies to an offshore investment account. Then, the cryptocurrency is converted into US dollars or Euros and invested in hedge funds to manage the assets. This is the way to utilize tax havens using cryptocurrency.

No Tax Savings, You Will Have to Pay Taxes

Offshore is a tax-free country, and although you can invest in all kinds of financial products around the world, you will not be able to save on taxes. Please do not misunderstand this point. When you invest in an offshore country, you will be taxed on the money you make.

There are some countries in the world that are not subject to capital gains tax. Tax havens, of course, do not have capital gains tax. Even if it is not a tax haven, Malaysia and New Zealand, for example, have no capital gains tax.

If you live in these countries, you will not be taxed on the money you make from your investments.

On the other hand, if you live in a country that has a capital gains tax, you will have to pay tax on the increased money from your investment. You must follow the taxation system of the country you live in, so make sure you pay the tax.

Managing Your Cryptocurrency in a Tax Haven

You can use tax havens to manage your cryptocurrency. However, if you just want to invest in cryptocurrency and manage your assets, there is no point in opening an offshore investment account. This is because the annual management fee is too high.

The reason why many people send cryptocurrency to an offshore investment account is that it is easier than sending cash. If you already own cryptocurrencies, you can easily send them to an offshore investment account and convert them into US dollars or Euros.

Also, compared to investing in cryptocurrencies, investing in hedge funds using an offshore investment account is less risky. So, if you want to use the unrealized profits of cryptocurrencies to switch from a high-risk investment to a low-risk investment, offshore investment is an excellent choice.

Understand the properties of offshore investments and decide whether you send cryptocurrencies such as Bitcoin and Ethereum to tax havens. If you are making large profits from your cryptocurrency investments, use financial instruments located in tax havens as low-risk investing options.