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Will Crypto Become The New Offshore Banking Option?

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Ashe Whitner has never been one to mince words. As the very first private banker and former head of business development at Euro Pacific Bank, the brainchild of prominent gold bug Peter Schiff, he has witnessed the controversial nature of offshoring and the global money system like few have.

Today, Whitner is the host of Liberty Entrepreneurs podcast, where his guests offer an in-depth look at the world of work and lifestyle freedom. He has also created Liberty Virtual Assistants - a venture that assists entrepreneurs in creating a support system for greater outcomes in their businesses.

At Anarchapulco, an event held in March and is touted as the world's premier conference for voluntaryist thinkers and activists, he raised eyebrows as a speaker on the topic of Offshore Banking and Cryptocurrencies.

In an exclusive interview with BTCManager before his one-year sojourn where he’ll live for one month in 12 different cities around the world, we asked Whitner for his “no holds barred” thoughts on the future of cryptocurrencies, offshore banking and the future of global business.

What Were Some of Your Early Learnings Working at Euro Pacific Capital?

It was originally started as a brokerage company with the thought that there would be a bank on the backend to facilitate wire transfers for people seeking to fund their brokerage trading accounts and invest with us. What we noticed pretty early on is that there was much more of a demand for an offshore or international bank than for a brokerage company. Now, all of the sudden, instead of helping people get into different investment vehicles like resource-based mutual funds, international stocks or gold and silver we found ourselves helping people send money around the world using the banking system.

How Exactly did that System Work?

The predominant way that money is sent at Euro Pacific is by SWIFT payment transfer. Interestingly, the only thing that is swift about it is the name because it can take anywhere between three to 30 business days for a wire to be received. The longer I worked in the offshore space, the banking space specifically, the more that I saw that this was an enormous pain. Frankly, about half of my time was spent hand holding people through the process.

Bet That must have been Frustrating?

[Laughter] Yea, I was constantly trying to answer client questions about where their wire transfer was, “why was there so much money taken out of my transaction,” and “why does it have to go through these three other banks before it hits my account?” Every bank it went through kept taking a little bit more money out of it. 

Then this Whole World of Cryptocurrencies Showed Up on the Scene...

Yes. Cryptocurrencies really got my attention. I became aware of Bitcoin in 2011 and really didn’t see the pain that it solved until 2013 when I became active in the community.

You’re Learning some Interesting Things with your Virtual Assistant Business Regarding Moving Money Globally?

So through my business what I am doing is helping entrepreneurs and small business owners hire virtual staff that can assist them in their day-to-day activities. These virtual assistants, however, need to get paid and that presents a problem. You can’t send them a bank wire because many of the bank accounts of our VA staff in the Philippines do not allow international bank wires into their account. They would also get crushed on the currency conversion. So sadly, if I’m paying someone $500.00 a month - after the currency conversion and all of the bank fees - I’d have to tack on an extra $100.00 per month to actually get them that $500.00. So the prevailing way is slow and not cost efficient.

You are now Experimenting with Bitcoin?

That is correct. There is a very large exchange Coins.ph, in the Philippines where our virtual staff can open up a wallet and then connect it to their bank account. It is it free to send the bitcoin to them for their salary. OK, maybe it costs me a dollar. And what is nice is that they have the option to convert every bitcoin that comes into their address into pesos, their currency. And then it’s actually free for them to send it back to their bank account.

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Is Your Problem is Solved?

To a point. PayPal was certainly not an option because they would charge the virtual staff to send their money back to their bank account, or even make them wait five days. And then there is Western Union, which has cash pickup for a couple of additional percentage points. That is simply not cost effective. So paying the VA in bitcoin is not only better for me as a business owner because it’s less expensive. But it’s better for VA because it is cheaper, faster and more convenient. And they also get discounts from within their bitcoin wallet.

Sounds like the Perfect Solution...

Well, not exactly. I have been very public about how slow and annoying bitcoin is, which is true. But it’s still faster than five business days and the $100.00 you would pay through the traditional banking system.

What are Your Concerns with Bitcoin Moving Forward?

With bitcoin, we’ve had this block size debate forever, and even a year ago, I interviewed Roger Ver and Erik Voorhees on this debate, and we still have not had any movement toward resolution. Sure we have Bitcoin Unlimited, and sure we have SegWit, we keep talking about all of the same stuff, but nothing is really moving.

What if this Block Size Issue Cannot be Resolved?

As has been well documented, if Bitcoin cannot solve its block size issue then the transaction fees will continue to go up and up as more people want to use bitcoin. And I actually see this happening. Ultimately I believe that bitcoin may end up being what people use exclusively for very valuable transactions. Think about it. If you need to send $30,000 then what does it matter at that point if you pay an extra $30.00 in transaction fees to use the Bitcoin blockchain.

Circling back to your Work with Euro Pacific, do you Believe Overseas Businesses will Continue to be Popular?

Here in the U.S. the Feds because of all of the regulations and requirements have made it so difficult to hire domestic staff. Frankly, they are essentially telling us, “if you hire people in this country, you’re going to pay big time. You’re going to be regulated, you’re going to have to pay a lot of money, and we’re going to tell you who you can hire and who you can’t.” When you hire someone internationally as a contractor, they stay out of your hair. So the government is telling us, build your business with all of your staff outside of our country.

Thus your Virtual Assistant Business?

As more people become digital entrepreneurs and build businesses that do not require a physical storefront presence or office, it only makes sense for them to hire international staff just for simplicity sake. Plus the U.S. dollar is really strong in a lot of other countries.

So There are Benefits to being International?

There are. That being said, for Americans, there are not those many options to save on taxation by making this move. The U.S. is one of just a handful of countries in the world which taxes its citizens on global income. This means that with the increasing restrictions being handed down, the offshore space is now essentially dead for those from the U.S. people.

But the Media Seems to Suggest to the Contrary?

All of the money that an offshore corporation makes will be taxed as though it were earned in the U.S. So there is no real tax advantage for an American citizen to have an offshore bank account or an offshore corporation. That said, in my experience, the only reason for Americans to have an offshore bank account or corporation is for privacy and asset protection again private third parties.

Is it then Safe to Assume that Every Transaction that you Send Offshore as an American Citizen is being Reported to the U.S. Government?

Yes. Also, having an offshore bank account is a red flag. You have to file additional forms with your tax return, and the Treasury Department has the ability, if they are not happy with the way you report, to capture and freeze 30 percent of all of your assets without any ability for you to reclaim that money. By choosing this route, you are actually opening yourself up to more risk.

Do You Believe then that Cryptocurrencies are Being Used to Steer Around this?

I am sure that people will try to do that. We all know that any account that you have with the bank, the bank essentially controls your money. In other words, any time you want to move money, you have to get their blessing and approval. They can shut you down; they can say no, they can take your money anytime and basically for any reason. The banking space, specifically the offshore banking space, you are considered guilty until you prove you are innocent.

With cryptocurrencies, you have the ability to transact without getting a third-party permission, which is a big improvement for people who want more control over their finances. Personally, I believe that the offshore banking sector is quickly going to be replaced by cryptocurrencies. Moreover, trusts and foundations will be replaced by smart contracts and multi-sig. The tide is changing in my estimation.