Adam Tracy Explains the Use of South Dakota Trusts in Crypto

Adam Tracy Explains the Use of South Dakota Trusts in Cryptocurrency

Transcribed from:

“I get questions from people who want start a coin, okay? And let’s differentiate between a coin and a token. A coin is like a currency coin is not necessarily even etherium based, but a coin doesn’t represent a ownership interest — it’s not a security. A coin is typically, you know, not launched through an ICO, but it can be. And the question becomes what structure, if I’m launching a coin, what type of structure should have? And I’ve spoken about this before, and I spoke about this in the context of foundations, right? I don’t like foundations, as a foundation implies not-for-profit — I think that’s, one, limiting and I think that’s, two, perhaps untrue in a sense, right? There is some profit motive behind launching a coin in most cases. As it relates to, you know, the structure that you have to use, you definitely need a structure, right? There’s still liability in launching a coin, and there definitely needs to some of entity behind it. And, really, the best structure for that is a trust, and there’s plenty of offshore trusts, which I’ll talk about in a different episode, but there’s also a lot of good structures that are domestic that would certainly do the trick. And, again, in a trust you have a trustee, who’s in charge of the trust corpus or the property of the trust, and the beneficiaries of the trust are the owners or the people who are entitled to receive the the property in the trust — so basically your coin holders in this case. One of the great places oddly enough for domestic trusts is South Dakota, right. You hear lot about Delaware and Alaska, and they’re good. South Dakota just tends to be the best and there’s a few reasons why:”

Transcribed from:

“1) A self-settled trust, meaning a trust that’s settled by the person who may be a beneficiary, is immune from creditors, meaning that in event of like a lawsuit or anything like that, a creditor can’t attach or obtain any of the trust corpus, the trust property. So in this case, like in the case of a coin, your trust properties likely to be more coin, right? And so what you want to be able to do is sort of shield that from any sort of creditor claims, and that’s what a South Dakota trust is able to do.”

Transcribed from:

“2) It has what’s called the protector and so, you know, typically with like a South Dakota trust you have a professional trustee — you pay trustee a certain fee for a year to, you know, on an annual basis to act as the trustee of trust. And that trustee is to some degree to govern the assets of the trust, which in the case of, you know, a decentralized coin or token there’s really nothing to do, right? So you’re safe in that regards. But the South Dakota law allows from something called the trust protector. And the trust protector is an individual or an entity that, in the instance or the case of any sort of legal peril, call it, has the ability to fire or terminate the trustee, and take the trust corpus and move that trust corpus, right? So it has the ability effectively take the trust property and move that to a different jurisdiction to seemingly shield it from any sort legal parent, like a lawsuit or anything like to that effect. So it’s really important and like the trust protector is really common with offshore trusts because, you know, those are asset protection trust by nature and you want to see like the utmost ability to sort of override a trustee. And you see that with South Dakota trusts, which is rare if not unheard of in the United States.”

Transcribed from:

“So two main reasons. Obviously South Dakota trust income is tax-free by the state. You know, you still have to contend with the IRS, but at least you’re not dealing with state level taxation. And so, you know, for starting a coin of any nature, right, you definitely need an entity, you definitely need something that is alive from a legal perspective, right, that has some sort of formation behind it because if not, you as the promoter are, much like with any like just starting a regular company, you’re creating lot of liability for yourself. So check me out. If have questions hit me up. My information is, — and I’ll talk to you later. Cheers.”

A former professional rugby player, Adam S. Tracy brings over twenty years’ experience as an attorney, consultant and dealmaker with a particular focus on cryptocurrency, digital products, payments and immersive corporate structures. As an accomplished executive and advisor to high risk merchants and stakeholders, Adam has proven himself as a results oriented, decisive leader with proven success advising early market entrants, technology adapters, as well as established participants across a wide range of verticals. Adam Tracy’s attack-first personality allows him to excel in dynamic, demanding environments including complex corporate negotiations, distressed environments and regulatory investigations.

In addition, Adam S. Tracy also has a successful track record co-founding high risk industry ventures, building & leading cross-functional teams, and spearheading diverse corporate transactions. A serial entrepreneur, Adam has successfully started and created exits across a wide swath of markets, including various mobile SaaS ventures, nutraceuticals, peer-to-peer payment systems, and several telemarketing-based ventures. Moreover, as a recognized expert in the payments field, Adam Tracy has been a blockchain and digital currency evangelist and influencer since the early days of Bitcoin.

Utilizing his proprietary “Pre-Event Driven™” strategy for decision making, Adam S. Tracy further leverages his over twenty years’ experience to create cost-effective, value-add solutions for each client. A data-driven acolyte, Adam continually refines his strategies based on field studies and data collection. Moreover, Adam Tracy further augments his range of solutions by actively networking with regulators, liquidity providers, legal and compliance experts, deal-flow brokers, investors and management of leading high risk industry ventures.

Adam S. Tracy earned his Bachelor of Science in Computer Applications and Bachelor of Science in Finance from the University of Notre Dame. He subsequently earned his Masters in Business Administration from the DePaul Kellstadt Graduate School of Business, while concurrently earning his Juris Doctorate from the DePaul College of Law. Adam lives outside Chicago with his with his wife, four dogs, and two cats.

On the Web:
Instagram: @theadamtracy
Telegram: @adam_tracy
Skype: @adamtracyesq
Email me: