Can I rely on Bitcoin to meet the financial requirement?
Bitcoin is a digital currency, or cryptocurrency, that never spends too much time away from the headlines. In 2020 the value of it increased by a staggering 224% and in April 2021 the value of one Bitcoin peaked at 63,558 USD. However, it is a volatile asset and despite the successes of 2020, recent turbulence has brought the value of one Bitcoin down to 38,210 USD at the time of writing.
Although the value remains difficult to predict, a lot of people hold substantial sums of money in Bitcoin. So can those people rely on Bitcoin to meet the financial requirement as part of an immigration application?
Bitcoin as a currency for cash savings
Although it is a digital currency, Bitcoin can be bought and used much like a fiat currency such as Euro, Sterling or US Dollars. However, some of the features that set digital currencies apart from fiat currency also make it incompatible with the Home Office’s guidance on using cash savings to meet the financial requirement.
One Home Office requirement is that your cash savings must be held in an account with a financial institution regulated by the appropriate regulatory body for the country in which that institution operates. However, one of the central features of Bitcoin is that, as a digital currency, it does not operate within any single country and is not backed by governments, financial institutions, or any other central authority. Therefore currency held in a Bitcoin wallet, which is where Bitcoin is stored, would not meet this requirement. There are some alternative platforms where you can store Bitcoin, known as decentralised finance platforms, but these too are not regulated or under the control of a bank. The requirement for cash savings to be held in a regulated institution is therefore a fatal problem for relying on Bitcoin as a form of cash savings for an immigration application.
Another Home Office requirement is that the level of cash savings held must be demonstrated with regular bank statements. As it isn’t tied to any bank or financial institution, the information available in a Bitcoin wallet does not look like the ‘regular bank statements’ the Home Office would expect to see in an immigration application.
A Bitcoin wallet is a software programme, and there are several kinds to choose from each offering different features and security measures. Rather than storing physical currency, a wallet stores the information needed to access Bitcoin and carry out transactions. While each user can log into their wallet and search their transactions, there are no regular statements issued by Bitcoin.
Using this digital currency as an investment
So if funds will not be able to meet the Home Office requirements for cash savings, could income from Bitcoin be counted as income from an investment?
Although it is not controlled by a central authority, it is possible to earn interest from Bitcoin for example through storing Bitcoin with a decentralised finance platform.
As with cash savings, the Home Office guidance set out the requirements for relying on income from investments to meet the financial requirement. And as with cash savings, the requirements specify that investments should be held in regulated financial institutions. Specifically, income from investments must be evidenced by a portfolio report for the financial institution they are with, and this must be regulated by the Financial Conduct Authority in the UK.
Even if the investment in Bitcoin was to be sold, in order to rely on the proceeds it would still be necessary to provide a portfolio report or other relevant documentation from a financial institution regulated by the appropriate regulatory body in the country in which it operates.Therefore, as with cash savings, income from investment in Bitcoin could not be counted towards the financial requirement for an immigration application.
Will I be able to rely on Bitcoin in future?
In short, maybe! Bitcoin and other digital currencies are increasingly popular and traditional financial institutions such as banks are taking note of the potential disruption digital currencies could have on the market. In April this year, the Bank of England and HM Treasury announced the creation of the Central Bank Digital Currency Taskforce which will explore the possibility of a new form of digital money issued by the Bank of England. Moreover, China has also begun to pilot its digital yuan currency in Suzhou City after 181,000 consumers were given approximately £6 of free money in digital wallets.
Therefore, with governments and regulated financial institutions beginning to take an interest in the opportunities that digital currency presents, one day we might see the Home Office guidance updated to reflect the unique features that digital currencies have. However, there’s nothing to suggest that such an update is coming any time soon!
How can I meet the financial requirement now?
There are a number of different ways that the financial requirement can be met, so if it is not yet possible to rely upon Bitcoin investments, there may be other routes that are available to you which would allow you to meet the requirement. We are happy to advise further on the route that would be most suitable for you. If you’d like to set up a free initial consultation, please feel free to do so via our online scheduling tool: