Protecting Cryptocurrency with an Offshore Trust & LLC Structure

15 August 2025

Cryptocurrency is a uniquely challenging asset class to safeguard. While it is inherently portable and can be transferred across borders in minutes, it is also highly visible on public blockchains, vulnerable to hacking, and subject to legal claims in the jurisdictions where its owners reside or operate. These factors make it essential to adopt a structure that provides both strong legal protection and operational flexibility. One of the most effective ways to achieve this is by combining an offshore trust with an underlying limited liability company (LLC).

Why Crypto Needs a Protection Strategy

High-value crypto holdings can become a target for lawsuits, creditor claims, or even insider theft. Even with good technical security, legal action can compel exchanges, custodians, or individuals to hand over assets. A well-designed offshore structure can:

  • Place ownership outside the reach of local courts.

  • Provide additional jurisdictional and procedural barriers for creditors.

  • Allow for professional management without surrendering control over strategy.

Direct Trust Ownership

An offshore trust can hold cryptocurrency directly in its own wallets, with the trustee responsible for its safekeeping. This approach can be straightforward, but it involves important considerations:

  • Custody Responsibility: The trustee must securely hold private keys, wallets, and backups.

  • Jurisdictional Rules: Trustees must comply with applicable anti-money laundering, tax reporting, and digital asset regulations.

  • Liability Containment: If a liability arises from the crypto holding, other trust assets could be at risk unless the crypto is the trust’s sole asset.

  • Administrative Overhead: Trustees may require indemnities, and transaction times could be slower due to required trustee approvals.
    Direct trust ownership works best for simpler holdings, where the trustee has in-house digital asset custody capabilities.

LLC Ownership Under a Trust

More commonly, a trust will own 100% of an offshore LLC, with the LLC holding and managing the crypto portfolio. This offers several benefits:

  • Operational Flexibility: The LLC can appoint a manager (often the settlor or a trusted specialist) to control wallet keys, execute trades, and manage staking or DeFi positions.

  • Segregation of Risk: Legal claims against the LLC are limited to its own assets; other trust-held assets remain insulated.

  • Separate Banking and Exchange Accounts: The LLC can operate its own exchange accounts, fiat bank accounts, and service contracts without involving the trust directly.

  • Duress Protection: In jurisdictions such as Nevis or the Cook Islands, the trustee can replace the LLC manager with one outside the reach of a foreign court.

  • Limited Creditor Remedies: In these jurisdictions, a creditor’s sole remedy is typically a charging order, which only entitles them to distributions and does not force liquidation of the crypto.

Transferring Crypto into the Structure

The process of moving crypto into a trust/LLC structure generally involves:

  1. Establishing the Trust and LLC: The trust is settled with the LLC as its wholly owned subsidiary.

  2. Transferring the Assets: The crypto is transferred into wallets controlled by the LLC (or directly by the trust if using direct ownership).

  3. Recording the Transfer: Proper documentation is prepared to show the transfer as a gift or capital contribution.

  4. Implementing Secure Custody: Multi-signature wallets, hardware security modules, or third-party custodians are set up under LLC control.

Conclusion

Cryptocurrency’s combination of mobility, transparency, and high value makes it an attractive target for legal and security threats. Holding it through an LLC owned by an offshore trust provides a blend of operational flexibility and strong asset protection, while direct trust ownership may suit simpler, more static holdings. The best structure will depend on your goals, risk profile, and operational needs. Professional advice is essential to ensure compliance and to implement custody practices that match the structure’s legal protections.

Disclaimer: The above is for informational purposes only and does not constitute legal, tax, or investment advice. Always consult with experienced professionals before establishing or transferring assets into an offshore structure.