My question is, lets say I have a fund with which I raise money in Bitcoin, Ethereum or other altcoins. I issue shares of the fund to the investors who will then get dividends from my fund (think hedgefund) Can I use the money raised in crypto, convert it to USD and invest it on the stock market? In other words, are you aware of any regulation which prohibits you from investing in the stock market with funds raised from cryptocurrency?
Thanks a lot
It is not illegal to take USD and invest in stocks for yourself. The source of your money should be legal of course. If you are investing cash for other people you then have legal and regulatory issues that must be addressed.
As to the underlying crypto hedge fund, this really depends upon the amounts of money and the persons you are dealing with. There are AML/KYC issues with FinCEN. There may be state money transmission issues is you are dealing in cash at all. Even if you are only dealing in BTC/ETH and the like you must protect yourself from AML issues by registering with FinCEN and making a good faith effort to collect identities where needed and to report when required.
You will of course be on safer ground as to money transmission laws if your hedgefund is opened with purely crypto and dividends paid purely in crypto and you are in a state that does not regulate that.
Finally you are going to have banking issues. But everyone has that.
I hope I answered your question.
George D. Greenberg, Esq.
www.attorneybitcoin.com
Thank you very much for the informative response. Just to be clear, as far as you know, it is legal to invest USD raised from a token sale into the US stock market as long as the fund is registered with FinCen and complies with AML/KYC regulation?
Are you trying to pin me down to a legal conclusion? Tell me, are you going to point a finger at me if my advice turns out not to be 100% correct? If you are going to manage others money and be an investor then you need to hire an attorney so you can get your "Just to be clear...." answers. I give only general advice here.
In general, it's just not that simple. Sorry but we are in the real world and the real world is complex. That is why attorneys and CPA's devote much of their lives to understanding the complexities, then people pay them for advice they can rely upon.
I'm beginning to tire of readers who think they are somehow entitled to have all of their problems solved without doing their own research and paying their way to solve the more complex issues. I don't mind your general questions but your "Just to be clear...." is a sign to me that you are not willing to put your money where your mouth is, all the while wanting to make money from other people's investments in you.
IN GENERAL SIR, you need to be careful about the sources of your token income as well as declaring any income on your taxes once you have converted the tokens to dollars (hint...hire a CPA.) In addition you need to be mindful of state regulations as to money transmission.
Another looming issue here is whether or not this new breed of crypto fund owner/managers needs to send out 1099's. When regulators catch up they may very well have to do so.
To all readers; these issues cannot be simplified to a few words. There are no magic solutions as these areas of regulation and taxation are constantly evolving.
George D. Greenberg, Esq.
7674 W. Lake Mead Blvd Suite 245
Las Vegas, Nevada 89128
www.attorneybitcoin.com
I'm really uncertain about the connotation you seem to give to "just to be clear." I was simply clarifying your advice. Certainly, I was not and am not going to be taking any of your advice as matter of fact. Of course I wouldn't as you are merely a "bitcoin" lawyer behind a screen somewhere who knows...
I do not hide behind any screen Sir. You may see me in person at 7674 West Lake Mead #245 Las Vegas, Nevada 89128 or call me at 702 796 5221 anytime. I'm here every day of the week.
There's always someone around the corner looking to discredit someone @JohnBitCo
AttorneyBitcoin/GDG- Nice to see you offering some helpful advice to the forum and for FREE?!!
Thanks again and Best Wishes in your practice.
Thank you for the kind and supportive words of appreciation. Best: GDG