Wealthy & Wise: Protecting your Crypto with a Nevada LLC

About the Video

Cort Christie is joined by Damian Barton to discuss all things Crypto. They discuss the various concepts of owning and trading Cryptos using LLC business entities. Whether you’re a Crypto trader or long-term investor, you need to protect those assets!

Prefer to read? A full transcript is provided below.

Cort:

Hello and welcome to another edition of Wealthy and Wise. I’m your host, Cort Christie. And today we’re going to be talking about crypto, crypto trading, crypto purchasing and what the best way to hold your crypto is, how to protect it, how to make sure that it’s always around in the future. How to maybe make sure that it gets to your heirs someday, if you really have a portfolio that you imagine really growing to millions of dollars. And making sure that the people that you want end up with it. And we have an expert with us today. We have Damian Barton. And Damian is here. He is a specialist at Nevada Corporate Headquarters. He’s actually our client service manager. And he’s got a broad background in many, many things. But most importantly, he’s been working with thousands and thousands of clients for years now, helping them protect and preserve their assets. So today with that, we talk to Damian about just, you know, cryptos and how that might play into all the things that we do at NCH. So welcome, Damian.

Damian:

Thank you for having me, Cort. I appreciate it.

Cort:

Absolutely. So, Damian, you’ve been working with clients for a very long time and helping them preserve assets, protect their wealth. And when you think in terms of crypto, you know what comes to mind just broadly as far as, you know, how one might look at their crypto portfolios or the assets that they hang on to?

Damian:

Well it can be used as a business or you can use it as an investment. So, it’s very flexible when it comes to that. And if you are utilizing it as a business, then eventually if you start generating enough income, then it might be wise to actually begin thinking about structuring that business venture. So that way you can, you know, keep more of your hard-earned income and also you utilize your money to actually grow in the crypto field.

Cort:

So, I know that so many people, some are just doing it partially on the side. Some people like me, you just buy it and hold. I don’t really hang on to it. Tell me about what you do in the crypto space.

Damian:

Yeah. So, if you if like you yourself, if you are holding they call that hodling, which actually stands for hold on for dear life. Right. Because the crypto markets actually are very volatile, especially in the beginning.

Cort:

I do it all the time.

Damian:

Right. And I’ve been involved with cryptocurrency since 2011. And when I had my candy stores, I actually had Bitcoin ATMs. And my stores were where night people would come in there and they would go, what is this? How do I purchase? And I says, well it’s a crypto ATM you can actually buy and you can sell. And so, for me, like when I started actually doing trading and getting more involved long term and I started generate enough income, I realized that at this point I think it is time that I that I incorporate. But if, if in the beginning there are certain things you want to get accomplished first so you don’t have necessarily get incorporated and build a structure behind it until you start generating enough income where it justifies it. So what happened with me is I started generating, you know, probably about a few thousand dollars a month and I realized, okay, it’s now, it’s time to get serious, because if you are just day trading for fun and you’re only doing a little bit, say, you know, put it on your put on your schedule, you know, put it on your personal tax return, the income that you’re making. But once you start, generating enough to where you feel like, hey, I actually should turn this into a business, I need to write offs. That’s the moment that you want to get serious and reach out to a company like NCH where we can actually discuss that with you. Free consultation. We’ll go over what the, you know, the options and guide you properly on what the proper structure is for your needs because everybody’s at a different level.

Cort:

Yeah. What I, when I think of like, you know, whatever your plan is, if you’re like me and you just holding on for dear life, right? And hoping that it continues to grow, but it grows up, grows down, grows sideways, grows every which way, never know which way it’s going. And then I think of it as an asset in terms of something that I can give to my children someday. If something happens to me, I want to make sure they know exactly where it is, how to go after it. And I do have it notated in my revocable living trust as an asset. So, the kids can actually go after it, avoid probate and make sure that it gets to them effectively. But, you know, in terms of most people and you know, it attracts all ages, the crypto markets, right? And so you think of it like, what happens if something happens to you, right? How do you have it set up so that someday your wife or your kids can take it over? How have you protected it that way?

Damian:

Oh, excellent. I actually have the same structure you do. I have a revocable living trust. And one of the things I like to bring up about that that I think is very valuable is in the crypto currency market itself, there’s actually two different concepts. There’s what’s called public keys, and there’s private keys. And with public keys, what that’s designed to do is that’s the key that you give out to others when you are transacting business. And it’s generally, it’s a 36 character ID that is designed to be for you to transact business. But then there’s also private keys and the private keys are actually the and the important part of your assets that you want to move into your revocable living trust, let’s say, in your in your case, because the private keys actually denote ownership. And you don’t want to give that to anybody that’s for you. So, you want to hide those as much you can. So, if you put them in a revocable living trust, make sure that’s allocated, and then that can go to your children as well. Now, one of the things I like to share, too, is I have more of a sophisticated structure, but later on you can actually designate through resolutions, amendments and minutes also how you want certain assets to be allocated if something were to happen, a business accident or something, you know, demise, something like that. But yeah, that’s the proper, in my opinion. A really good way to hold your assets, especially if you’re hodling right? If you’re just holding it, you’re not trading and you’re just accumulating. A lot of people like to do that because long term, you know, it’s still early in the markets as far as I’m concerned. Shoot, I mean, it’s only, what, since 2009. So, it’s not that old.

Cort:

Very early, at the front. And it really didn’t gain a lot of traction except for, what, four or five years ago.

Damian:

Right.

Cort:

Right.

Damian:

And I would argue, too, that that’s actually happened because of, you know, talk of regulation. I know that in 2014, the Internal Revenue Service came out with publication 525, which outlined the how to how to pay your employees in crypto, how the IRS views it. You know, all these things I think are important that we understand. So, because of these changes in the marketplace, there’s been more interest because it shows that the government is taking it seriously and they’re trying to make regulation. And with regulation comes the big boys, comes the whales and things like that. And that means a lot more money put into the markets. And it’s right now, I think it’s like over a $2 trillion market cap, if I remember right. And so, there’s a lot of room for growth that’s really not much in the grand scheme of things.

Cort:

Because that’s global, right?

Damian:

Right, right. That’s a global market.

Cort:

Right.

Damian:

And with Bitcoin in particular, not just to pick on one, but just a share, there’s many different cryptos, obviously, but with Bitcoin in particular, you know, that is the number one cryptocurrency at least currently. And in the future is only going to be 21 million made. So, you can see that eventually at some point there’s going to be less and less and less of them, which also increases potentially. You know, you never know with markets, you could go up and down, could go to zero for all now. Right. So, we have to keep that as an eventuality.

Cort:

It’s a scarce resource.

Damian:

That’s it. Exactly.

Cort:

Gold, they can mine. Right? Dollars they can print.

Damian:

Right.

Cort:

You know, you think of equities, they can issue more stock. You know, with Bitcoin, it’s going to get to a point where there’s no more and that’s a scarcity. And that’s going to be fun when it gets to that point because when somebody wants it, all they’re going to have to do is keep bidding it up, bidding it up. So, at the end of the day.

Damian:

Supply and demand.

Cort:

Absolutely. So those are things you want to protect. Crypto is an asset that you want to look at. How do you protect it? And I think, you know, with you trading, that somebody like me holding, you can look at it both ways. I could put my assets into a revocable living trust. I could also have them in an LLC to protect them even further. But I think when you’re trading, you know, there’s advantages of having it in a business entity where you can start writing things off. You know, the technology you’re using, maybe the travel you go to. There’s events all the time for learning the latest about, you know, new projects that are coming out. And you go to these events and pay for that through your business account where you’re trading your crypto. So, there’s a lot that you can do. The latest greatest in that space, newer than crypto is our NFTs. Even though you use crypto mostly Ethereum to pay for your NFTs. But NFTs I look at it almost like that is a collectible, right? It’s a tradable thing like baseball cards or I don’t go down the path of art because it’s they don’t have the same level of scarcity because they’re printing, you know, issuing, I don’t know, thousands at a time, some of these projects that are coming out. But how do you consider NFTs when it comes to asset protection? And you know, I have a buddy the other day that told me his NFT account, you know, he’s only been in it for about three months and he probably invested about 30 grand, but he said he had almost $200,000 of value now. He hasn’t cashed out. So, you know, the question is, is that real or not? But it’s 200 grand. And, you know, what would you do to protect NFTs if you had them?

Damian:

Great question. So now when you when you’re holding long term, that’s more of a passive situation.

Cort:

Yes.

Damian:

And you don’t really need, you can have an entity, but you don’t absolutely have to have one. The RLT will do just fine for that. But when you’re trading, that’s more active. And when you do an NFTs technically that’s more active, at least for most people. Now everybody’s different and there always, always are exceptions. So, you know, we want to look at every situation uniquely and then we want to be able to guide and coach based off people’s personal needs. But when you have NFTs the idea, at least for me, when I could, I have done NFTs as well. And the idea for me really was to generate money to actually earn an income. And so, I buy at a certain price and I want to turn around and sell it and hopefully sooner rather than later. So, I would consider that more active. So I would put my NFTs in a business. But again, it’s not for everybody. Some people do want to treat it as art. Maybe there’s like a signed basketball or something that’s a picture of it, right? Or, you know, who knows what? And there’s all these different ones that you see on there. So you want to be able to tailor it towards what your needs are. But if I were doing NFTs and I were active and I were doing trading like, you know, trading like you and I were originally talking about, not hodling. I personally like the LLC through that active trading and then I would probably set up as an S corporation as well. Just, you know, this is a general thing. This is again, everybody’s different. But I would do the S corp because I want to be able to capture as much of the of the tax benefits. I want to capture the asset protection because you separate liability from personal from business. Also, I would set up my account in the name of the LLC, so it’s not my personal name that is a critical part of having, you know, the S corp active. So whatever exchanges you’re using, try to do it under the name of the entity itself because you’re going to be doing that active. And this really legitimizes your business venture. And that way when you go to these events, when you come to Vegas and come visit us and you go to these, you know, huge convention centers to learn about it, you can actually put that on your business and not on your personal.

Cort:

It’s all tax deductible. It’s a write-off for you.

Damian:

It’s a write off.

Cort:

Right. And those are real assets. Crypto is a real asset. You know, NFTs clearly are an asset. And depending on where you’re at, I have another close buddy of mine and he’s trading every day his NFTs. He can hardly wait to get into the latest project, buy the latest, you know, pieces of art, I guess they are, graphics that are coming out. And then he’s looking as quickly as possible to find a way to maximize the value of those and flip them. And so, every day he’s in and out because he’s got so many NFTs that he’s been playing with. And for me, you know, I’m not really into NFTs I, I literally own two, put my toe in the water about a month or two back. And, I still look at it as like something that the kids are more into. But the ones that I know that are good at it aren’t kids. They’ve been studying and researching this stuff because you can also lose a lot of money very fast in that space. And so, I think about, you know, what the future looks like when you’re holding assets. You know, it’s like real estate. We talk to our clients about holding any type of valuable asset in a structure to give it some level of protection. Right? And then in addition to that, if it’s kicking off income like you’re renting a rental property, it’s got tenants in it, you know, or if you’re flipping properties, there’s all kinds of tax advantages of using the right business entity. So, if you are that passive holder, as you mentioned, I agree with you, revokable living trust. Just make sure that it gets to the people that you want it to go to if something happens to you in the event of death right? But if you are a trader and you’re active like you are in cryptos, like my buddy is with his NFTs, then why wouldn’t you want to take advantage of setting it up in a way where you could write off parts of your life because you’re actively doing things? And there’s a bunch of expenses that come out of that, you know. All day long you think about what you need for your technology, what you need for your feed, what you need for information flow that’s coming to you. And you know, as you mentioned, come to Vegas, come and visit us, go to events. There’s all of that that you can take advantage of, too. So, you know, where do you see these markets ten years from now as you kind of project into the future? Where do you think crypto is going to be at in our lives?

Damian:

I like to explain it like this. When I was a kid, my parents, they used checks and their parents used cash and then I was using credit cards. And then now I see my kids right now they’re using their phones to pay for everything. And so, I can see in the future cryptocurrencies actually being the next evolution of money, where you actually are witnessing how the digitization and the velocity of all things.  So, the Internet of Things I think will be a very important aspect to our lives where we’ll have different universes, if you will, for industries where if you want to buy tires, you can actually find different components, utility coins and things like that that work within those industries. If you want to go get books, you can have, you know, all these industries will be built around blockchain technology and it’ll be a part of all of our lives. And I truly see our future based within this system. So learning about it now, getting involved now, will actually give you a lot more advantages in the future. Because what I also see is this is not going to be just a local thing. This is actually going to be a global thing. So, no matter where we go, we’ll be able to transact and do business this way. And I also like ten years, I also feel like we’re going to be doing a lot of really interesting things ten years from now. And I know that the, that people, our leaders want to have us travel the stars, if you will. Let’s just look at it that way. Let’s just say that this is maybe a future of ours and we go into other lands. One of the things that I think will be very easy for, for us to do as a species, as a as a population is how are we going to bring wealth to these far distant places?

Cort:

So, let’s say a colony on Mars.

Damian:

There you go. So what you do are you can’t ship gold and silver at the cost. So, at you do is we have this infrastructure, this blockchain ethereal infrastructure put into place. It’s all based off the Internet. And you can actually transact business long distances through velocity. Also, I also see things like, you know, with different governments creating the Belt and Road Initiative, for example, or what we’re doing here in the United States by trying to connect our cities, these things are going to be smart cities. These things are going to be smart transportation systems that make sure that everything is accounted for. And that’s really what the value is. A blockchain, blockchain is really only two things. It’s timing and it’s a ledger. The timings important because everybody has to be on the same exact time. So that way you don’t have what’s called the double spend problem, which is corruption in our money and itself validates because of that system. So, there’s no third party actually getting involved in saying, oh, that goes there, that goes there, it automatically does it itself. And it’s been around a while and it’s really held up, tried and true over the course of all this time. It’s functioned by automated, self-organizing itself that has had no hiccups, and it’s only become stronger over time, which shows its value. So that’s the timing. The ledger component of it, and this is also important, is that way everybody on the system is so decentralized that everybody on the system has to validate those transactions. So if your ledger says you have one Bitcoin and my ledger says I have half a Bitcoin and I pay you half a Bitcoin for whatever services that I need for from NCH, what will happen is I transfer that half a bitcoin to you for those services and then all of a sudden the ledger now shows that mine is half gone, yours is half, and then everybody else on the nodes that are within that system validates it. So that way, you know that’s a real transaction and this is incredibly valuable, valuable over long periods of time and long distances. So, those really, that’s kind of what we’re talking about here. So, it’s nothing magical per say other than velocity, utility and that everything can now be tokenized. You know, even this table and everything can be accounted for and that that there’s great value in that if used for, as an instrument and tool and not as a weapon. And that’s where we really need to be responsible in ten years, because you can use this technology to to harm others, if you will, because you can surveil and you can you know, you can find everything about somebody using this technology. So there has to be a level of privacy, but there also has to be a level of accountability. And I think that’s really where the future is. The future is about personal responsibility, about what we do. And we will be able to vote with our cryptocurrencies. I know this is a long explanation, but you’re talking about ten years. So there is a lot of information compacted within that time, a lot of evolution that’s going to take place. But in my opinion, we will all be better for it in the end, if used responsibly.

Cort:

Do you think 100% of the population will have exposure to crypto in ten years?

Damian:

I do. And the reason why I think that is because it’s kind of like everybody has credit cards now and it’s really easy for them. Already has, you know, does online and it’s just that’s again, that’s a natural evolution, barring some huge catastrophe. But huge catastrophes, you know, it’s like you can only bet on it once and by that time won’t matter for anything. So you might as well just plan as if, you know, as things go on, because we always make adjustments in our lives to accommodate the changes that we have in life. And, you know, knowing that you make you make wise choices. So, if you get involved, just do small moves in cryptocurrency, just small little things that don’t harm you, don’t hurt you. So you can learn as you grow. But the trick is, is that what I like to say is you have to get in at least something that way you’re invested. Because once you’re invested, it causes you to learn, because then you start realizing, Oh, wait, I am actually making something here, I’m actually doing something. and now I’m interested. And then every day try to do a little something. You’ll find over time that you don’t know a lot.

Cort:

Yeah, absolutely. Put your foot in the water, right?

Damian:

Yeah.

Cort:

It’s like the first house when you want to get into real estate, you know, you learn how that transaction works. And the same way with crypto, the first account you learn, what is it like to set it up? Or you have to take a picture of your I.D. with your face in it. You know, all the little things that you have to do to prove that you are you. And then pretty soon you start playing around. I think for our YouTube listeners, there’s tons of information on YouTube. In fact, almost too much information out there on crypto. But it’s a great way to learn and get so much of, you know, knowledge from that. I also think from a merchant standpoint, so let’s say take NCH or anybody accepting money right now, if you accept $100, two and a half dollars has to go to a third party or 3%, maybe $3 goes to Visa, MasterCard. Right? And so every dollar, you’re not getting the full dollar. And I think what’s fun in the crypto space is, they can make these transactions frictionless very fast, but then not charge. Or if they are, you’re talking about pennies versus dollars on transactions and it just helps businesses out where there isn’t a middleman in the middle of it taking a chunk of every one of your transactions. And I know, Visa, MasterCard, are very freaked out about what the future looks like with crypto transactions because they’re going to be cut out, you know, and I think that’s a big thing. And merchants want to hang on to their hard-earned money. Plus, I think there’s merchants that do sell products online that somehow, sometimes have issues with fraud or with people doing chargebacks where they did get the goods, but they say the goods never arrived and that’s out there and that’s real. And as business people, we see that. And so now the sudden you’re going to have a system which is verified, proven that, yes, you made that transaction. Nobody else could have gotten in the middle of that transaction. And very difficult. You know, I think that the companies that are out there, that the groups, I won’t say companies, but the groups out there have criminal syndicates that steal credit card data, you know, that are out there just testing those credit cards or using them to buy goods online. It’s not going to happen the same way with crypto. It’s going to be very difficult to start stealing, you know, thousands of private keys and hack into a system to get those private keys. They’re not accessible, like credit card data that’s stored on an online platform. They’re just going to hack into and steal that data. So it’s going to get good for consumers. It’s going to be good for business people. I’m excited about the future and I think crypto is with us forever, you know, and I do know that you mentioned that, you know, privacy is going to be something that is going to be more and more important as time goes on and not privacy in a bad way, but privacy from people peering into your lives and how valuable that’s going to be and especially when it comes to government and others, you know, we want to make sure that our lives have some level of privacy, that they’re not into everything that we’re doing every day. And how valuable is that? I think it’s so important. So, it’ll be interesting to see how things evolve over the next decade. But thank you for coming in and sharing so much information with us and just talking about cryptos and how you might protect yourself and NFTs and make sure that they end up with you, your kids, and if you’re active and take advantage of turning into a real business because that’s what we want people to do at the end of the day. So, Damian, thank you for your time today.

Damian:

Thank you for having me. I really appreciate it.

Cort:

It was a pleasure. And for all of you listening today, thank you for tuning in. And this has been another edition of Wealthy and Wise. I’m your host, Cort Christie, thanks for watching.

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DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.