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Offshore Bitcoin Exchange

 What is a bitcoin exchange

What is a Bitcoin Exchange?

Bitcoin exchanges are digital marketplaces where traders can buy and sell bitcoins. These trades occur using different fiat currencies. Fiat currencies are currencies that a government has declared to be legal tender. However, fiat currencies are not backed by a physical commodity such as gold. Examples of fiat currency are paper money such as the US Dollar bills or Euro banknotes or coins where the face value is greater than their metallic value.

The value of fiat currency is derived from the relationship between supply and demand. The value is not derived from the material that the currency is made of.  A bitcoin currency exchange is an online platform rather than a physical location. The exchange acts as an intermediary between buyers and sellers of the popular cryptocurrency. People often use the Bitcoin symbol BTC or XBT. There are ways to drastically enhance privacy by holding bitcoin offshore in an offshore LLC, which we will discuss below. You can hold proceeds internationally through offshore banking. Our organization can help you establish an offshore company and bank account by calling one of the telephone numbers or by completing the inquiry form on this page.

bitcoin exchanges

How do Bitcoin Exchanges Work?

Bitcoin exchanges work by matching bitcoin buyers with bitcoin sellers. Bitcoin traders can opt to buy and sell bitcoin by placing a market order. When a trader places a market order, the trader is authorizing the exchange to trade his bitcoins for the best price available in the online marketplace. Alternatively, they may make a buy or sell offer for bitcoin by placing a limit order. When a trader places a limit order, the trader instructs the exchange to buy the bitcoins for a price at or below the current asking price or above sell them at or above the current bid. In this way, a bitcoin exchange is similar to a traditional stock market.

Imagine that on a bitcoin exchange three coin sellers are asking for BTC/USD 8700.10, BTC/USD 8700.50, and BTC/USD 8701.00. A trader who makes a market order to buy bitcoins will receive their order at the best asking price of  BTC/USD 8700.10. If a trader wants to purchase more bitcoins than are available at the best asking price under a market order, the remaining bitcoins will be purchased at the next best rate. If the trader wished to purchase ten bitcoins in the above scenario but only five were available at BTC/USD 8700.10, the remaining bitcoins would be purchased at BTC/USD 8700.50.

However, some traders prefer to capitalize on speculators who may wish to unload their currency. These traders offer a price below market value hoping that an eager seller will give them a good deal. For example, a potential buyer may place a limit order for BTC/USD 8700.00 when the market price is BTC/USD 8700.10. The order will be filled if, and only if, a seller matches the price of BTC/USD 8700.00 or offers a lower rate.

Online bitcoin exchanges generally refer to buyers and sellers who participate in limit orders as either makers or takers. The exchange adds limit orders buyers or sellers place to its order book. The order stays there until the another trader matches the price by on the other end of the transaction. The buyer or seller who sets the limit price is referred to as a maker once the limit order is filled. A trader who places a market order that immediately gets filled is referred to as a taker.

Bitcoin exchanges all have transaction fees. These fees are applied to each completed buy and sell order carried out within the exchange. The rate of the fee depends on the volume of bitcoin transactions being conducted. The popular bitcoin exchange Bitstamp has fees ranging from 0.5% to 0.9%.  Kraken’s fees range from as low as 0% to 0.26%. Coinbase has fees ranging from 1.49% to 3.99%. When choosing a bitcoin exchange to use, it is important to consider a number of factors in addition to the rate. It is essential to look at reputation, privacy policies, and ease of use when selecting an exchange.

Generally, a user has to first register with the exchange in order to make a transaction. The user will then  go through a series of verification processes to confirm their identity. Once the verification is successful, an account is created for the user. The user must then transfer funds into their account in order to purchase bitcoin. Different exchanges accept different methods for depositing funds. These methods include bank wires, direct bank transfers, credit or debit cards, bank drafts, money orders, and sometimes even gift cards. Traders can withdraw funds from the exchange using whatever methods their particular exchange provides. These methods may include bank transfer, PayPal transfer, check mailing, cash delivery, bank wire, or credit card transfer.

There are almost always fees associated with making deposits and withdrawals. These fees vary depending on the payment method chosen to transfer funds. Generally, fees will be higher with mediums which are more likely to return funds. For example, credit and debit cards and PayPal are more likely to incur chargebacks as opposed to a bank draft or money wire.  As a result, the fees for having funds transferred using credit and debit cards or PayPal are higher than those for bank drafts or money wires.

Traders may also be subject to currency conversion fees. These fees vary depending on the currencies that particular bitcoin exchange accepts. If a trader transfers Euros to an exchange that only deals in US dollars, the exchange will convert the EUR to USD for a fee.  The trader will then be able to purchase bitcoins in USD. When the trader wants to cash out the funds in their account, the system first converts the  bitcoin to USD. It can then, at the trader’s request, convert the USD back into EUR. Keep in mind that every currency exchange will come with an associated fee. For this reason, it is best to pick an exchange which deals in the local currency of the trader.

It is important to note that bitcoin exchanges are different from bitcoin wallets. Bitcoin exchanges offer platforms where buyers and sellers can trade bitcoin. Bitcoin wallets, however, are digital wallets which are securely used to store bitcoin. These wallets store private keys which are used to access the bitcoins. These keys are used to authorize transactions using bitcoin. The majority of bitcoin exchanges offer bitcoin wallets as a part of their services. However, there are usually fees associated with the use of these wallets. Many people use an offshore bitcoin wallet, as many call it, where a person sets up an offshore company for bitcoin account privacy.  They then register the wallet in the name of their company.

offshore bitcoin exchange

Why Use an Offshore Bitcoin Exchange?

One reason that people use bitcoin is for financial privacy. Bitcoin transactions are anonymous because the names of users are not documented. Bitcoin users must, however, open an account with a bitcoin exchange in order to make trades. Choice of jurisdiction is as important when dealing with bitcoin as it is when forming a business. The location of the exchange will determine the laws to which it will be subjected.

Government regulation is increasingly tightening its grip around bitcoin in the United States. The US government hopes to regulate and tax every single bitcoin transaction which occurs within there nation’s borders. Recently, a number of United States regulatory agencies have begun to clamp down on bitcoin. The International Revenue Service (IRS) views bitcoin as an asset. As a result, it is subject to government tax claims. The IRS has begun to issue John Doe Summons for bitcoin traders. These summons are used for reporting on all holding accounts in the United States. This includes accounts which are used to hold bitcoin.

It is not just the IRS which taking an interest in bitcoin. Other US regulatory agencies have also started to take an interest in the popular cryptocurrency. That is perfectly understandable. After all, someone has to pay for the radar. The United States Security and Exchange Commission (SEC) is attempting to treat bitcoin in the same manner as conventional paper currency. The SEC is attempting to treat initial coin offerings (ICOs) the same way as initial public offerings (IPOs). So, the US is probably not one of the best countries for ICOs. It is likely that the US will follow the lead of other nations in regulating bitcoin.

The government of the People’s Republic of China issued sweeping reforms with regards to its policy on bitcoin and other cryptocurrencies in September of 2017. The Chinese government started its crackdown by blocking initial coin offerings, known as ICOs. Next, they ordered the closure of all bitcoin exchanges in Mainland China. Lastly, the Chinese government restricted the foreign travel of anyone operating a bitcoin exchange. They revoked the passports belonging to those individuals and made it impossible for them to leave China. The Chinese government imposed restrictions on bitcoin for the same reason that the American government is likely to do so. They imposed restrictions on bitcoin in an attempt to control and tax the unregulated cryptocurrency.

For the above reason, many forward-thinking individuals are choosing to take their bitcoin to favorable offshore jurisdictions. It is possible to use offshore bitcoin exchanges in the same manner as one would use an offshore bank account. Offshore bitcoin exchanges offer significant advantages over domestic bitcoin  exchanges in terms of financial privacy and asset protection. Domestic bitcoin exchanges are subject to the laws of the United States. This means that a domestic bitcoin exchange may be ordered to reveal identifying information regarding their users. As a result, they may be compelled by the judgments of US courts against bitcoins which are effectively linked to a debtor.

Many favorable offshore jurisdictions do not recognize foreign judgments. Those which do not have tax information exchange agreements will not release information regarding account holders to the US government. That being said, privacy is fine when used in perfectly legal ways. So, obey the law and pay your taxes. Nothing said here is suggesting otherwise. Not by a long shot. Besides, you’ll sleep better at night.

Bitcoin Conclusion

What to Do

To maximize privacy in an offshore bitcoin exchange, hold your account in an offshore LLC. So, set up an offshore LLC and hold your cryptocurrency in the company rather than your own name. We have found the most private LLC is in the Caribbean Island of Nevis. We have been establishing companies there since 1994. To set up a Nevis LLC, or to simply get more information, call 1-800-959-8819 in the US or Canada or internationally at +1-661-310-2929.


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