Finance Monthly - July 2022

49 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s benefits from the gross roll-up effect. This is especially relevant for cryptocurrencies which are subject to high returns (and lows!). Unstructured cryptocurrencies could be subject to tax on an arising basis in countries like Australia, France, India, Singapore and USA. Does PPLI offer liquidity for clients? By funding a PPLI, a client with crypto assets will have access to a private account which would function as an “off-ramp” conversion to fiat (legal tender whose value is linked to a government-issued currency like the US dollar). The client can then request a partial surrender for liquidity needs (which might trigger taxation depending on the tax residence of the client). Do you see more people choosing to hold crypto within PPLI in the coming years, if so, why? Yes indeed, more and more people are looking to hold their assets in a safe and secure way. As the legal ownership of the policy is with the duly regulated insurance company, for high-profile clients looking to secure their assets from claims, if a policy is set up correctly (taking care to observe the absence of fraudulent conveyancing) then the assets within the policy are out of reach of a client’s creditors. With clients already leading global lifestyles and with relocations becoming easier again, one of the major advantages of a PPLI is the portability, which allows clients to keep their policy (making sure to comply with local requirements for policies), thus avoiding the need to surrender the policy and triggering a taxable event. As cryptocurrencies will come under stronger legal, regulatory and tax scrutiny, cryptocurrency investors will be confronted with potentially higher legal and tax challenges in order to keep the portfolio in a compliant way, while benefiting from asset protection and tax deferral. Holding these assets in PPLI structures will help to mitigate those risks. “Cryptocurrencies are designed to work as a decentralised medium of exchange, independent of a financial institution or any other central authority so the custody is not with a traditional arrangement of a banking institution but held by a token or key with the key holder having secure access via private passwords or biometric authentication systems.”

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