Does cryptocurrency trading through my foreign-owned LLC create effectively connected income (ECI)?
I'm a foreign national living in Singapore and I own a single-member LLC in Delaware. The LLC's main activity is actively trading cryptocurrencies — buying and selling on U.S. exchanges like Coinbase and Kraken, sometimes dozens of trades per day.
I've read that trading in stocks and securities for your own account generally does NOT create ECI for foreign persons under the IRC Section 864(b)(2) safe harbor. But does this safe harbor apply to crypto? Crypto isn't technically a "security" or "commodity" under traditional definitions.
If crypto trading does create ECI, I'd owe U.S. income tax on all my trading profits. That would be a huge deal. Can anyone clarify the current IRS position?
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