ZEC and sovereignty became my main investment thesis in recent years. I keep seeing the same theme in the community: more real-world use of ZEC.
Has me thinking about what I could contribute through what I actually know: commercial real estate. I’m a CRE owner and developer on the South Side of Chicago (the nice part). I acquire and redevelop boutique/custom commercial spaces, generally 1,000–5,000 square feet and regularly build to suit for tenants (high end retail/restaurant/social spaces). If developers, miners, infrastructure operators, or others in the ZEC ecosystem need physical space, I’d be interested in building around those needs and accepting rent in ZEC, or some combination of ZEC + USD.
In a previous life, I worked in the CFTC/SEC-regulated brokerage/clearinghouse/SRO world and handled regulatory onsite reviews of data centers, so I’m not completely foreign to the infrastructure side; but I’m not a software engineer.
The basic idea: support people building in the ZEC ecosystem while putting ZEC to work in an actual commercial transaction based on what I know - in Chicago near the new Illinois Quantum and Microelectronics Park (IQMP) development. I don’t know what the right use case is yet. That’s why I’m putting it out here. If anyone sees an intersection, I’d like to hear about it. And if anyone in the ZEC game, in Chicago, wants to grab a drink that would be cool.
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Sadly, no. Cryptocurrency is already grey water. a PRIVACY coin? You’re kidding.
The closest you can get without a firestorm is buying shares of the Zcash Trust, or the recent Greyscale Zcash ETF, and using them in the payment.
Interesting. I’m not aware of any prohibition on accepting ZEC as payment. My thought would be to denominate the lease in USD and simply give the tenant the option to satisfy the rent obligation in the equivalent amount of ZEC at an agreed conversion rate.
If there’s a specific regulatory issue you’re thinking of, particularly one unique to ZEC/privacy coins, I don’t know what it is. But I understand your point as it relates to privacy and optics with normies.
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It’s not a prohibition as much as a MASSIVE inconvenience. Assuming the amount is more than $10,000, the IRS immediately arrives to perform a colonoscopy on your finances.
Further, due diligence departments at most decent corporations speak in the language of risk. They want to be one thing: risk averse. They hated cryptocurrencies for like a decade until stablecoins. It’s a few more decades until ZEC is accepted by them.
Any credible company conducting real-world transactions in ZEC should maintain accurate records of its basis and report capital gains and losses as required. ZEC is not exempt from the law. In fact, these are exactly the kinds of practices the privacy-coin ecosystem will need to embrace to gain credibility within any regime,…which I think is part of the goal here.
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The issue is that SHIELDED ZEC, whose adoption needs to gain credibility, does not have any public records like transparent ZEC or Bitcoin has. You’d have to provide them your IVK/UVK, and even then, it’d be MONTHS of back and forth and a tax audit all while the IRS is threatening to charge you with tax evasion.
If it’s transparent ZEC, then the approach is the same as Bitcoin and it’s not really anything different than the dozens of providers who already onramp and offramp BTC/ETH.
I understand the point, and I dont think you’re wrong. But two things… One, you aren’t required to shield ZEC. Two, even if it is shielded, a company can still maintain its own records and provide the visibility and supporting information its accountants, auditors or regulators would need if requested. A company like mine already has the accounting infrastructure, experience and knowledge to do that. I can choose to shield the ZEC or not or later at some point in the future.
Either way, privacy becomes more important - which is why ZEC is gaining traction. If a developer, miner or anyone else in the space wants to pay rent or other bills in ZEC, thats real-world use. It creates adoption and helps build credibility for the asset.
How a comp chooses to maintain its books and records is ultimately on them.
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Look, I’ve been in the compliance space too before on a contract basis, as I’ve mentioned here. Simple thing is, this isn’t new. This has been tried before. People used to buy property in bearer, or with bearer before, such as anonymous Treasury bills.
One can argue that Treasury bills (at the time) were the same as shielded ZEC. You can choose to convert them at any time, as Treasury bills (were and are) one of the most liquid and secure assets on the planet.
But still, they were outlawed, tracking added, and now most require full tracing.
The simple fact of the matter is AML/KYC. Two entities transacting through ZEC, what proof do you have that the ZEC you received was truly paid by the person who claims to be paying? What if the ZEC was paid by the CCP and the person is a Chinese spy, only claiming that the ZEC is his? How far WILL you account for it?
It looks like this:
[CCP’s shielded wallet] -(private)-> Spy shielded wallet -(unshield)-> dummy transparent wallet -(transfer)-> spy’s “claimed” wallet → you
You can only prove the last link in the chain.
Real estate is one of the most regulated fields on Planet Earth, and this is the reason why ZEC or other privacy coins are being so aggressively cut down on.
But sure, there is a solution: onramps/offramps. Use one of these and they do the ID verification parts and take on the legal liability, they are practically purpose built for this! In the Bitcoin space, they charge extortion rates to make a fortune! By your logic, if it was legally safe, we should be seeing dozens of offramps catering to shielded ZEC.
Do we? (Hint: We don’t)
I’ll put my AMLCO hat back on…as you know, KYC/CIP is risk-based. The KYC/CIP piece is pretty straightforward in this case. I know my tenant (i.e., a ZEC miner), I know their business (mining ZEC), I know the source of the funds, and they’re physically operating in my building. I’d feel pretty comfortable answering questions about where the rent payments came from.
I’m also not looking to collect rent in ZEC generally. The point of my post is to find devs or miners in the ZEC ecosystem, in Chicago, who need physical space and not money changers or other businesses traditionally treated as higher-risk from an AML perspective.
Again, you’re not wrong if the counterparties or source of funds are unknown. But I think the concern you’re raising applies more to landlords accepting crypto from higher-risk businesses without appropriate systems or controls in place. That’s not the use case I’m floating here.
…if the Winklevoss’ asked me to accept their rent in ZEC, I’d say ok and support it with the appropropriate risk based documentary support.
Did you read literally nothing? It’s not about whether YOU trust them. It’s about whether the IRS and your bank trusts them, since they are the ones who will hold and tax the money. Unless, of course, you don’t intend to pay taxes, that is. How do you prove that to the IRS? Best case, the amount is small and they skim over it. Worst case is when you succeed and it piles up to $50k in a year, and triggers an audit.
It’s not about trust. And I think you’re conflating two different issues here.
A commercial real estate developer accepting rent is not a covered financial institution subject to CIP requirements simply because it accepts ZEC as payment. I’m not operating an exchange, transmitting money, or converting funds for third parties. So I don’t have a bank-style CIP obligation that I somehow need to satisfy here.
That said, I would still take a reasonable, risk-based approach to KYC/source-of-funds as a matter of prudent risk management. If I know the tenant, understand their business, know the source of the ZEC, document the lease and transactions, and maintain appropriate records, I’m pretty comfortable with the risk.
The IRS issue is separate. If I receive $50k worth of ZEC as rent, I report $50k of rental income and maintain records supporting the valuation and transactions. An audit doesn’t somehow make accepting ZEC prohibited.
I’m pretty familiar with this distinction, btw. In a previous life I helped draft public comments when provisions of the BSA/Patriot Act framework were being implemented and modified in the 2000s.
You seem like the kind of compliance professional who makes airplanes so safe they can’t fly. 
Bro, I’ll just invoice your rent in USD.
Okay, I’ll concede, I’m overly cautious TBH. It’s mostly only because while I was in the compliance profession myself, I saw a lot of people suffering very bad fates. Personally, even if there’s a 0.1% chance of that, I’d rather the system never be implemented.
As a former AML compliance officer, I understand your perspective. But this is really my only point: a real estate investment company is not a covered financial institution under the PATRIOT Act.
As I understand it, this community wants to expand ZEC’s real-world use and credibility. I believe in what ZEC offers, and it represents a small, experimental part of my broader commercial real estate investment portfolio…which is what I do now.
I’d like to contribute to the community and participate in the ZEC marketplace by experimenting with a fairly simple idea: somebody in Chicago working in the ZEC space, perhaps without a ton of cash, but with access to ZEC through a mining operation, could pay some or part of their rent in ZEC. That’s it.
I’m not arguing that U.S. regulators aren’t nervous about the combination of crypto and privacy. They obviously are. But if this community wants legitimacy, these are exactly the types of things that need to happen in a safe, credible, and properly documented way.
I have the accounting systems in place. I have compliance and regulatory experience. And for the past ten years, I’ve been buying old buildings on the South Side of Chicago and making them beautiful.
If anybody in Chicago wants to grab a beer and talk about it, hit me up.
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And it’s also the favorite cash cow of countries. Immovable wealth is way too easy to plunder.
In the end, you only truly own what you can defend by yourself, all the rest is just a make-believe.
100% true. But in the meantime, you have to put the servers somewhere.