Why one passport isn’t enough in 2026 – citizenship expert Alex Recouso

True Wealth: money & business podcast

Alex Recouso, CEO of CitizenX, discusses the strategic necessity of diversifying citizenship and residency portfolios to mitigate geopolitic

Key takeaways

• A second passport should be treated as insurance that must be secured before a crisis occurs.
• US citizens face unique financial risks due to citizenship-based global taxation regardless of residency.
• El Salvador has launched a rapid citizenship program utilizing Bitcoin and USDT donations.
• The trend in citizenship is shifting from purely tax-driven motives to seeking sovereignty and values alignment.
• A 'passport portfolio' can include different residencies and citizenships to maximize regional mobility and privacy.

Main topics

• Citizenship by investment
• Tax residency vs. citizenship
• US global taxation

Notable quotes

You can't buy insurance once the house is on fire.

Conclusion

Diversifying one's legal identity through multiple passports and resid

Transcript preview

Speaker 1 (0:00) The single biggest risk many people are not yet thinking about is how their passport can be used against themselves and it can turn into a liability instead of an asset. That's Alex Rucuso. He's Speaker 3 (0:12) the co-founder and CEO of CitizenX, one of the world's leading firms helping high net worth individuals diversify their citizenship and residency portfolios. Speaker 1 (0:21) People just want to have more sovereignty, more freedom. and to reduce their dependency on a single country. In today's Speaker 3 (0:28) episode, you're going to learn how to design your life so governments have as little control over your future as possible. Speaker 1 (0:35) The first thing that you should think about is your threat model. What risks do you have? And from that... try to think how to protect from those risks. Speaker 3 (0:45) A decision framework for thinking about citizenship, residency and tax residency as separate pieces of a long-term wealth strategy. Speaker 1 (0:54) Most people think about their residency as their tax residency, but there's citizenship. base taxation. U.S. citizens who pay taxes no matter where they live, they will always pay taxes to the U.S. Oh wow, yeah, that Speaker 3 (1:06) makes a lot of sense. And the current state of citizenship by investment and what wealthy families need to know before making a move. Speaker 1 (1:13) I would say that there are many new jurisdictions available that were not available before. When something goes wrong, it's when you really need it. It's a bit like insurance. You can't buy insurance once the house is on fire. Let's get started. Speaker 3 (1:30) So Alex, people hear terms like citizenship by investment, residency by investment, merit-based citizenship, golden visas, golden passports. As the co-founder and CEO of CitizenX, you've helped people build passport portfolios, which I love, that give them greater freedom. Can you give us a simple framework for understanding what each of these pathways actually are and the differences between them? Speaker 1 (1:59) Basically, the citizenship, passport, residency, they are all different things. I'd like to start from explaining what is residency, because even within that term, there are some nuances. Most people think about their residency as their tax residency, essentially where they are tax residents, where they have to pay taxes. But there's another set of people who have global taxation. citizenship-based taxation, like for example, US citizens who pay taxes no matter where they live, they will always pay taxes to the US. But then within residency, you can also understand it as your permanent residency. That means your rights to stay an unlimited amount of time and work. in a certain country, and within that to obtain it, there are some programs like golden visas, residency by investment programs, where you are essentially making an economic contribution to a country, and they grant you resident status in the country, which means that you can stay an unlimited amount of time, you can work in the country, and in some cases, you can even apply for citizenship after a certain number of years. And citizenship is basically the gold standard of all of these terms. It's the highest bond between an individual and a nation, and it will grant you the most rights within that country. One of those rights is the right to hold a passport. That is basically the travel document that you use internationally. That way, generally, we like to focus on a diversified passport portfolio that will give much more benefits than just a diversified passport. residency portfolio. Speaker 3 (3:41) So that makes sense. So there's kind of like a, there's like, there's levels to it. It's probably the best way to describe it. So as somebody kind of starting new to this, where, what is each one best suited for? So be it residency or a passport, why would I choose one over the other? Speaker 1 (3:58) Normally it depends on your goals and your needs. Let's say someone who is looking to reduce their dependency on a single country. Normally, that comes from having just one citizenship and one passport. You have a single point of failure. And basically, you can also use residency to reduce your dependency on one state. You can get a second residency in another country. But normally, the most powerful tool for that would be getting a second passport because you would have the same amount of rights. You would have full rights and you would be a full citizen of another country. When we are talking about travel freedom. For example, normally some residency permits would also improve your travel freedom. For example, if you hold a golden visa in the UAE, you would have visa-free access to all GCC countries. You would be able to travel visa-free to Oman and to Qatar and to other GCC countries. But normally a passport would be a much... powerful tool. If you have an Emirati passport, you have one of the most powerful passports in the world, especially when it comes to mobility and to visa-free access. And then if you are looking, for example, to get another set of documents to improve your privacy, to incorporate accounts, bank accounts, to... create your wealth structures like offshore trusts or companies, then in most cases you would be required to show a passport, not an ID card. In which case, getting citizenship in another country is again a more powerful tool. But again, it normally depends on the goals, needs, as well as the budget and constraints. Normally it's much more difficult to obtain citizenship in a country than to obtain citizenship residency. So it always depends on the individual circumstances. So Speaker 2 (5:51) if we're looking at like the goals and needs that people have, what are the most common ones that people typically have when they decide, okay, I need to go get myself like a plan B or build a portfolio of passports? Speaker 1 (6:03) Traditionally, a portfolio of passports was a tool for mobility and travel freedom. Just because it used to be people who were born in countries with weak passports that were limiting their life. They could not travel freely to do business on vacation. And it was really a pain for them. And I'm talking, you know, people from countries in Africa, India, Pakistan, countries that don't have strong passports. And that really limits their life and their possibilities. But I would say, especially during the last decade, we have seen a shift and more Westerners are seeking diversification and are seeking a second passport. I think this is also because of the general trend of distrust in governments that was accelerated in 2020, obviously. And people just want to have more sovereignty, more freedom, and to reduce their dependency on a single country. They seek a... Plan B passport and they seek to diversify their passport portfolio. So when it comes to Westerners, not only Americans, but also Canadians, Europeans, I would say their main driver is getting a Plan B and also getting access to a safe jurisdiction that they can take their family to in case of political, social instability. And then another one, I would say, is access to different regions. So, for example, when we are talking about South Pacific countries or countries in Africa, many of these regions have higher growth rates than other regions in the world. And it is not that these people, in some cases, they are looking to do business in these regions, and it might be easier to do so with a local passport, but also... in terms of generational planning for their children, grandchildren, it will be something that they will inherit. And they think, well, maybe it's beneficial for my grandchildren to have an African passport because it's a region that is growing a lot. And I would like them to have easier access to that region. Speaker 3 (8:10) If you're enjoying this conversation, please do subscribe. We're a brand new show, so this will really help us to grow and reach more people. And in return, we promise to make this show Speaker 2 (8:20) a little better with every single episode. Sound fair? let's get back to it. Speaker 3 (8:25) Thought again, because obviously with a passport, it can be passed down, like obviously children and grandchildren. I hadn't thought of that because obviously with residency cards, they don't get passed. That's, that's just issued to the person where a passport then is you're basically a citizen. So it's, Speaker 1 (8:40) it's a generational asset. Yes. Yeah. That's a Speaker 3 (8:43) really interesting thing. Um, I hadn't thought of that. So, okay. And that's okay. So Because I did have a question about this, because what I love, I love the, me and Anthony, we love marketing. So when you, when you guys deliver the passport, it comes in this beautiful box and you talk about generational freedom on the box. And one of my questions is going to be, what do you mean when you say generational freedom? But it's actually this inheritance that you're passing on to your children and grandchildren. Speaker 1 (9:12) Not just that, but also another one of the differences between residency and citizenship is. the timeframe, let's say, when you're granted citizenship, that is for life. No one will take it away from you. There have been cases in the worst states in human history where people were denaturalized. And that's also one of the reasons why some people are seeking to have a second or a third passport to hedge against that risk. But it's basically something that holds against. human rights. When we are talking about residency, obviously temporary residency is temporary and it is issued for a certain number of years. But even when we are talking about permanent residency, that on paper should be permanent. You need to renew your residency card every five, 10 years or whatever. the status should be permanent, but even so it is much more easier to be revoked. And we have seen it in places like even the US where permanent residents got their status revoked recently. Speaker 3 (10:18) So the US has a really interesting perspective. So obviously, you know, the US passport's amazing. So many people spend their lives trying to get a US passport. But for people sat in America or for the... the American clients that you deal with who are looking for a plan B, where are they looking at as their options for second passports? Speaker 1 (10:44) First of all, what's surprising is that the US passport used to be one of the most coveted piece of paper in the 20th century, but it is becoming less so. And especially for high net worth individuals, one of the biggest drawbacks that it has is global taxation. As I was saying, the US imposes citizenship-based taxation on US citizens, so no matter where they live, They will always have to pay taxes to the IRS, not financial advice. I'm not a tax advisor, but it's generally the case. So that makes it really hard for U.S. citizens to not just optimize taxes, but also plan around things like wealth preservation, inheritance, and those kinds of topics, and really reduces their options and their optionality. That's one of the main reasons why US citizens seek a second passport. So they don't depend on just one agency that can decide to increase their taxes. Now, it's very popular, the conversation around wealth taxes in the US, for example. So that's one of the reasons why they seek a second passport, basically as a hedge and as a plan B. Traditionally, the most popular jurisdictions were Caribbean countries, just because they have been the longest running citizenship by investment programs where you could essentially acquire a second passport without presence requirements, without residency requirements, no language requirements, either in a matter of months in exchange of an economic contribution. So traditionally, these were the most popular countries, but we're starting to see more and more countries around the world offering the same type. of direct citizenship program places in the pacific countries in africa also in central and south america we work directly with the government of el salvador to launch their citizenship program Argentina recently approved citizenship by investment law. So we have seen more and more options. And again, I think the more the options, the better for the individual and the family that has specific goals and needs, and they can find something that fits their situation. Speaker 2 (13:05) You mentioned that you worked with El Salvador directly. Can you tell us more about that? Speaker 1 (13:09) Yeah, so El Salvador launched the fastest citizenship program in the world. in 2023. And basically it's a $1 million donation directly to the government of El Salvador in Bitcoin or USDT. And you get full citizenship for you and you can include as well your spouse and minor children under 18. And it's basically the fastest program in the world and the only one that accepts cryptocurrency directly. That was one of the main reasons why the government of El Salvador benefited from our advice, because as a technology company, we have some expertise in that area. And it quickly became one of the most popular options for our clients because it's a really strong passport as well. It's not just that it's a fast, streamlined process. but it's also a strong travel document with visa-free access to the Schengen area, for example. So as a plan B for Americans who were looking also for a place that is close to the U.S. in case they want to relocate there potentially, it had a bit of the same appeal that traditionally Caribbean countries had, but with a more streamlined, modern, and efficient process. Speaker 2 (14:33) So obviously like they're big supporters of like cryptocurrency and obviously they've been taking the crypto in order to basically pay the million dollars. So just how big of it in terms of like people coming towards to you to basically like get additional like passports or citizenship? Is it that they're coming because of cryptocurrency? I Speaker 1 (14:52) would say many crypto investors instantly get why. passport diversification is important because I would say they have more of this distrust in governments. I think it's something that is very common within the cryptocurrency ethos. So I would say that it's a big group of people, but like I said, not the only group of people, definitely. Speaker 2 (15:27) If you're holding... cryptocurrency and then you go to get like a passport, let's say from El Salvador. Is there any things that would help you with that situation? Speaker 1 (15:35) Not really. One of the reasons why more cryptocurrency investors feel attracted to El Salvador is because of their stance with Bitcoin. Basically, they made Bitcoin legal tender and they protect the rights of Bitcoin investors and Bitcoin holders. So I would say that's specific to that group of people, but it's also a general trend in people who seek citizenship diversification because they are seeking not just a plan B, but also a country that in some way aligns with their values. Traditionally, again, when it came to Caribbean countries, it was more about tax efficiency. Most of these jurisdictions, they were... tax havens with zero percent taxes all across the board. So people knew that if they wanted to one day, they could relocate to these countries and they could have a very tax friendly treatment. And they knew that these countries would never come after them with wealth taxes, let alone with global taxation. So I think it started with that. Then the next wave was. El Salvador with specifically Bitcoin investors. But I would say the general trend is, you know, people want to feel part and they want to have citizenship in countries that they feel share their same values. Speaker 2 (17:00) Last week, I think it was you tweeted out that basically every European should have like a plan B passport, like a plan B residency and like Bitcoin in self-custody. Could you like walk us through the thinking behind that? and what risks you feel that you're optimizing against that probably a lot of people aren't actually considering. Because I can speak for myself, I've got a British passport and a Portuguese passport, and it's never really crossed my mind. So I'm kind of curious to understand. Speaker 1 (17:26) Traditionally, European passports have been some of the strongest travel documents in the world, some of the most powerful passports giving you access to most of the world. But I think what... many people are not yet thinking about is how their passport can