Puerto Rico sees resurgence of interest among crypto rich
The United States territory of Puerto Rico is seeing a resurgence of interest among crypto investors attracted by the fact it doesn’t charge federal income tax and eligible investors can pay zero taxes on their crypto gains.
Under local law Act 22, those who live in Puerto Rico for at least half of the year are exempt from taxes on interest, dividends and capital gains — meaning they can keep most or all of the profits from crypto or other investments without having to renounce U.S. residency.
The popularity of the territory as crypto tax haven was highlighted when news stories emerged that Frances Haugen, the Facebooks whistleblower, had moved to Puerto Rico in March. But it’s been a haven for crypto people for years, including Bitcoin billionaire Puerto Rico who owns a nine bedroom mansion there.
Logan Paul, the social media personality and Cryptozoo founder, moved to the island earlier this year where he rents out a $55,000 a month mansion. Paul told Time Magazine the island’s tax free status was a big part of the appeal:
“In Puerto Rico you’re motivated to do more and make more money because of the implications that come with it.”
Crypto related businesses that have relocated to Puerto Rico in recent years include the hedge fund Pantera Capital from New York and NFT marketplace SuperRare from Silicon Valley. More traditional finance types like legendary hedge fund manager John Paulson have also become residents.
The Puerto Rico Blockchain Trade Association (PRBTA) recently announced the first edition of the Puerto Rico Blockchain Week for December of 2021, which aims to lure more crypto millionaires and investment into the island.
“We seek to connect entrepreneurs with communities in Puerto Rico and educate them on the multiple benefits available in the crypto era,” stated Keiko Yoshino, Executive Director of PRBTA.
The capital migration that crypto is bringing to Puerto Rico is boosting economic growth but comes with drawbacks for locals. Projects like Puertopia, which is a crypto utopian community in San Juan, are blamed for causing housing prices to soar.
Puerto Rico is not the only location competing for crypto dollars.
Aiming to attract crypto investors and businesses El Salvador also offers major tax breaks on Bitcoin trading with investors exempt from paying capital gains and income tax on Bitcoin.
Other classic tax havens have a cryptocurrency friendly environment including Switzerland, the Cayman Islands and Malta. St Kitts and Nevis, which is home to “Bitcoin Jesus” Roger Ver, allows savvy crypto investors to avoid taxes and offers a citizenship by investment program and asset protection advantages for crypto millionaires and businesses.
In Portugal crypto traders and miners are exempt from income tax and in Apri the country approved the Digital Transitional Action Plan which will promote the creation of economical areas dedicated to encourage blockchain-based business.