Investment transactions in exchange for Bitcoin

Today (2021), when Bitcoin is worth about $ 50,000 per unit, there is a lot of money in the hands of alot of Bitcoin holders, who just do not know what to do with it because the amount they hold is very large. Many of the holders simply do not know that it can be used to invest in other assets such as private stocks or real estate, and there are many entrepreneurs and company owners who need an investment and do not know that investments can also be made in Bitcoin (or any other virtual currency).

Bitcoin holders can invest in "regular" assets, and business owners looking for an investment can get an investment in Bitcoin. This article is for you.

Investment transactions for Bitcoin are an excellent method of connecting an investor to a company that needs investment.

Here are some of the few investments which can be made with Bitcoin payment:

a) private equity. i.e., buy shares in a private company - a startup or a real estate investment company. Or sell shares in your business in exchange for Bitcoin.

b) real estate. i.e., buy a home directly from a seller, with Bitcoin. Or sell a home and receive Bitcoin.

c) invest in hedge fund. i.e., buy (or sell) a stake in a hedge fund, which will invest in the stock market.

d) buy/sell whatever you wish!

Bitcoin investment transactions consist of three parts:
1. The Structure of the Transaction
2. The Technical Part
3. The Exchange Part 

Transaction structure
This part of the investment transaction in exchange for Bitcoin, deals with the investment contract itself. In the investment contract we will basically determine the terms of the transaction itself. For example, when will the buyer pays in Bitcoin, when will the seller allocates shares or percentages in the company, and so on. The investment contract is the legal part of the transaction and it is important to build it properly to make sure that all the legal obligations of the seller or the buyer are arranged in such a way that neither party is at legal risk of breaching the contract as a result of improper planning of the transaction structure.

This part is the legal part, but expertise in the field of virtual currencies in general and Bitcoin in particular is required to draft the investment contract in Bitcoin correctly and professionally. One of the issues that needs to be addressed in the contract is the existence of anti-money laundering procedures, without which the exchange procedure may fail (below).

The Technical Characteristic
This part addersses the technical transfer of the virtual currency from the buyer to the seller. When making a transfer of Bitcoin from one virtual wallet to another, the transfer cannot be canceled or reversed, a property which requires that we as lawyers hold the Bitcoin in trust as part of the transaction procedure.

In addition, a small mistake in transferring bitcoin from the buyer to the seller can cause all the transferred Bitcoin to be lost forever without the possibility of "saving" the lost money. We as lawyers have extensive experience in bitcoin transactions and know how to ensure that there are no mistakes.

The Exchange Part 
This is a part that is done after the transaction is over, i.e. after the buyer has received his shares (or any other asset from the seller), and the seller has received the Bitcoin and retains it and now wants to exchange the virtual currencies into Dollars, Euros, Shekels, etc., so he can use the funds as he sees fit.

For this part we need to use, in advance, procedures of prevention of money laundering regarding the buyer, which as already written above, must also be included in the investment contract - otherwise the exchange procedure will fail.

This part of the transaction in fact involves contacting with banks that agree to exchange the seller's Bitcoin in Dollars or Euros, or otherwise using other means and mothods of exchange.

When it comes to a transaction where a tax is required to be paid, the exchange issue is even more important. This is because the seller has to pay tax in a large amount of money to the tax authority but the income he/she received (Bitcoin) is not in a currency which the tax authority is willing to receive.

In conclusion, an investment transaction in exchange for Bitcoin requires special expertise and should only be carried out through professional guidance.

If you have such a deal, contact us to schedule an appointment and receive a quote!