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Article: Issues for Chinese EB-5 Investors in the Year of the Rooster By Bernard Wolfsdorf, Esq. and Joseph Barnett, Esq.


  • Article: Issues for Chinese EB-5 Investors in the Year of the Rooster By Bernard Wolfsdorf, Esq. and Joseph Barnett, Esq.

    Issues for Chinese EB-5 Investors in the Year of the Rooster


    2017 will be the Year of the Fire Rooster. Speculation is that the Year of the Fire Rooster is going to bring fresh challenges requiring quick wit and practical solutions! This would likely be an accurate prediction as there are many challenges appearing as we start the New Year.

    The start of a new year is a time of reflection and can signify hope for a better future. It’s a time when parents discuss their goals and aspirations for their children. It’s a time for individuals to empower themselves to ensure a stable, secure, and healthy future. At Wolfsdorf Rosenthal LLP, we are proud to have helped hundreds of Chinese immigrant families with EB-5 visa applications in 2016. Our biggest concern is the ever-increasing waiting line for Mainland Chinese born investors. While presently just over 3 years, the line is constantly getting longer, and will soon go to 4 years, 5 years and beyond, unless congress takes steps to resolve this issue by adding more numbers.

    Here are five important matters that current and potential Chinese EB-5 immigrant investors should be paying attention to in the beginning of 2017.

    1. New Currency Control Rules by the Chinese Government. Amid weak domestic growth and an uncertain economic outlook, the Chinese State Administration of Foreign Exchange recently indicated that it wanted to close loopholes to restrict the outflow of capital. Starting January 1, 2017, Chinese individuals desiring to send capital overseas will be required to disclose the purpose of the money transfer, with penalties to be imposed on those for not making an honest statement. For example, Chinese citizens must now pledge that money won’t be used for overseas purchases of property, securities, life insurance, or for immigration purposes; these restrictions are not necessarily new, but the requirement to disclose it to the Chinese government is. Additionally, Chinese citizens will be required to confirm that they are not lending or borrowing funds to other Chinese citizens to evade currency restrictions. This is particularly troublesome for potential EB-5 investors who may have been able to use the “friends and family” approach to transfer funds out of China in the past. Further, starting July 1, 2017, Chinese citizens will only be able to transfer up to $7,500 per day out of the country, as opposed to the current $50,000 restriction per year. It is rumored that there will be strict enforcement of these provisions to slow the recent surge in capital fleeing China. While Wolfsdorf Rosenthal LLP does not counsel clients on currency exchange procedures, it is recommended that all potential investors strictly comply with all local currency control regulations when making an EB-5 investment. China’s new, strict controls on overseas investment may make it more difficult to comply.

    2. EB-5 Regional Center Sunset and New EB-5 Regulations from USCIS Creates Sense of Urgency. Right now, the EB-5 Regional Center program is set to expire on April 28, 2017, and Congress must act to extend it under current rules, or modify and reform it. Additionally, USCIS has prepared new EB-5 regulations which may be published before President Obama leaves office on January 20, 2017. The regulations include increases to the required EB-5 investment amounts. If published, the regulations will almost certainly become effective within 30-60 days, potentially by February 19, 2017. There may be a grace period to apply before the new rules are applied, but it will not last long, and we have seen a sense of urgency from EB-5 investors to submit Form I-526 petitions before the new rules become effective. Thus, there are 3 separate deadlines emerging that potential Chinese EB-5 investors should be aware of:

    a. February 19, 2017 – Potential Effective Date of USCIS Regulations

    b. April 28, 2017 – Sunset of EB-5 Regional Center Program

    c. July 1, 2017 – Strict Enforcement of Chinese Currency Outflow Regulations

    3. Chinese Educational and Environmental Circumstances Creating Demand for U.S. Green Cards. Compounding this urgency is the fact that the Shanghai Municipal Education Commission announced clear guidelines requiring private elementary schools to use only Chinese curriculum, such as instruction on Marxism and patriotism required in public schools, to “uphold national sovereignty and ideology.” Additionally, China has recently struggled with thick smog and dangerously unhealthy air quality levels that have shut down schools, businesses, flights, and highways. Both of these events have created considerable anxiety among Chinese parents, which will likely continue the demand for EB-5 green cards in general, including the earlier submission of EB-5 applications by parents with younger children.

    4. EB-5 Statistics. USCIS received over 5,500 Form I-526 petitions from July 1, 2016 to September 30, 2016, and over 14,000 Form I-526 petitions in the entire Fiscal Year 2016. This is only a few hundred less than what was submitted in Fiscal Year 2015, despite the uncertainty surrounding the EB-5 Regional Center program. While the number of I-526 filings that occurred from January 2016 to June 2016 was low, we expect a high demand for filing EB-5 applications because of the circumstances mentioned above. The number of pending I-526 and I-829 applications continues to grow; we are hopefully that USCIS’ recent I-526 filing fee increase, from $1,500 to $3,675 effective December 23, 2016, will provide the agency with sufficient resources to reduce the length of EB-5 adjudications.

    5. Use of Bitcoin for EB-5 Investment. As the new Chinese currency restrictions loom, there has been more talk about using Bitcoin as manner of transferring funds out of China to an EB-5 investment project. Bitcoin is a type of digital currency, created and held electronically, that operates independently of a central bank. Because Bitcoins are not tied to any country, international transfers are generally easy and cheap and subject to less regulation. The system uses innovative encryption to track movement of each Bitcoin and ensures that the buyers and sellers remain anonymous by only including the “bitcoin address” of the transferee. Bitcoin operates as a 21st century “hawala” system that USCIS has previously recognized to be compliant with EB-5 law. These financial systems work as follows: A broker receives investment funds in an EB-5 investor’s native currency, exchanges the value of those funds in another country (here, U.S. dollars) on behalf of the EB-5 investor, and then transfers the investment funds into an EB-5 project’s account.

    Right now, because of the devaluation and lack of credibility of Chinese currency, there is normally a fee equal to approximately 8% of the value of the Bitcoin transferred out of China, and EB-5 investors are not prepared to pay a premium because there are preferable options currently available. With China looking to strictly enforce its new currency outflow restrictions, and with a majority of the Bitcoin market based in China, we may see a demand for Bitcoin if it becomes the only option. However, with changing economic conditions, it is unclear whether the Chinese government will allow Bitcoin transfers to continue as is, and may seek to become a more active Bitcoin regulator.

    As long as transfers are made in compliance with local laws and regulations, there is no reason why an EB-5 investor should not be allowed to use Bitcoin as the method of transferring capital. Although USCIS has yet to opine on this issue and despite the fact that Bitcoins are not favored by the U.S. federal government, here are the arguments we would use to demonstrate an EB-5 investor’s compliance with EB-5 law and regulations:

    a. 8 C.F.R. § 204.(j)(2) requires an EB-5 investor to provide evidence that he/she “has invested or is actively in the process of investing lawfully obtained capital in a new commercial enterprise in the United States . . . .” (emphasis added).

    b. 8 C.F.R. § 204.6(e) defines the term “capital” to include “cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien entrepreneur …” (emphasis added).

    c. The Internal Revenue Service within the U.S. Department of the Treasury has produced guidelines treats virtual currency like Bitcoin as “property.”

    d. A U.S. District Court in Texas has ruled that Bitcoin is a currency or form of money and that the investment of Bitcoins constitutes an investment of money.

    e. As long as Bitcoin transfers are made in compliance with all local laws and regulations, this “capital” should be deemed “lawfully obtained.”

    f. Because the Bitcoin system’s software encryption easily identifies each transaction and keeps a public record of each Bitcoin’s movement, it is sophisticated to assist USCIS in determining the “path of funds” of each EB-5 investment.

    In conclusion, despite the ever-increasing visa waiting for Mainland Chinese EB-5 investors, many Chinese citizens are starting to apply earlier to get a spot in line at the current investment level.

    Wolfsdorf Rosenthal LLP is a full-service immigration law firm with offices in Los Angeles and New York known worldwide for its unmatched excellence in providing top-quality U.S. immigration representation.

    This post is designed to provide practical and useful information on the subject matter covered. However, it is provided with the understanding that no legal, tax, accounting, or other professional services are being rendered or provided. If legal advice or other expert assistance is required, the services of a competent professional should be sought.

    This post originally appeared on © 2017 Wolfsdorf Connect. All Rights Reserved. Reprinted with permission.

    About The Author

    Bernard Wolfsdorf, Esq. and Joseph Barnett, Esq. : Bernard Wolfsdorf is the managing partner of the top-rated law firm, Wolfsdorf Rosenthal LLP (, and the past national president of the 14,000-member American Immigration Lawyers Association (AILA). Established in 1986, Wolfsdorf Rosenthal LLP is known worldwide for providing exceptional quality legal services. With 19 lawyers and offices in Los Angles and New York, the firm was recently listed as a top-tier immigration practice by Chambers & Partners with several of the firm's attorneys listed in the 2015 International Who's Who Legal. Mr. Wolfsdorf specializes in EB-5 investment immigration in addition to the full range of global immigration matters. Joseph Barnettis licensed as an attorney in the State of Illinois and the State of Wisconsin and practices exclusively in immigration and nationality law. Robert Blanco specializes in business and employment immigration cases. He prepares both immigrant and non-immigrant petitions for skilled workers, executive managers, high net worth investors, and people of extraordinary ability in the arts, sciences, and business. Mr. Barnett's practice focuses in the area of EB-5 Immigrant Investor Program; EB-1A foreign nationals with extraordinary ability in the sciences, arts, education, business or athletics; and other business immigration matters

    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

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