Regulation
Cryptocurrency Regulation in Puerto Rico 2024
Puerto Rico is a beautiful Caribbean island. It is an unincorporated territory of the United States. It is home to approximately 3.2 million people. The capital of the island is San Juan. The island is developed by Caribbean standards, but is poorer than the poorest city in the United States. Although Puerto Ricans have been US citizens since 1917, a significant portion of the island’s population currently lives below the US poverty line. The island has a mixed economy, dominated by the manufacturing sector. The service sector also plays a significant role, but agriculture plays a very small role in the economy. In recent years, the island has become a hotspot for cryptocurrency enthusiasts. Several cryptocurrency entrepreneurs have flown to the island. What is inspiring this influx of cryptocurrency enthusiasts are the crypto-friendly tax laws established by the island. Act 60 is transforming the cryptocurrency landscape on the island. The ongoing transformation is expected to have a positive impact on the country’s economy. Many see the island’s unique combination of US affiliation and tax benefits as a golden opportunity. In fact, how liberal is the island’s cryptocurrency regulation? It will definitely be better than the US. Is that true? Not sure? Let’s check.
1. Cryptocurrency Regulations in Puerto Rico: An Overview
Cryptocurrency is a hot topic on the island of Puerto Rico. Since 2017, the cryptocurrency sector on the island has been continuously improving, as many cryptocurrency enthusiasts have moved to the island. The main reason for this continuous improvement in the sector is the existence of Act 60, which was recently established on the island. The cryptocurrency community on the island has been continuously growing in recent years. Initiatives aimed at improving the cryptocurrency sector have the support of the local government, but they face strong criticism as not much has been done so far to address the problem of the alleged problem of gentrification.
1.1. Puerto Rico Act 60: A Brief Explanation
Act 60 is actually a strategy of the island to attract investment. What this law essentially does is to offer tax incentives to residents. This is an updated or improved version of Act 20 and 22. The act provides generous benefits such as zero taxes on passive income, such as capital gains and dividends, and low corporate and income tax rates. To qualify for the benefits offered by the act, individuals must live on the island for at least three years. What makes this law extremely attractive to cryptocurrency enthusiasts in the United States is that it provides a unique opportunity to enjoy tax savings while maintaining US citizenship.
2. Cryptocurrency Regulations in Puerto Rico: What’s New
July 30, 2023: San Juan Mercantile Bank & Trust International has officially begun operations, offering custody and settlement services for both fiat and digital assets. This service integration with the San Juan Mercantile Exchange enhances options for cryptocurrency traders.
July 2, 2024: Robinhood has expanded its cryptocurrency services to include Puerto Rico and the U.S. Virgin Islands.
3. Explanation of the regulatory framework for cryptocurrency taxation in Puerto Rico
Puerto Rico is literally a tax haven in every sense. Under Law 60, residents enjoy 0% tax on cryptocurrency earnings. It doesn’t matter if you are a trader, a cryptocurrency staker, or a cryptocurrency miner. The source makes no difference in the tax rate you would have to pay. To qualify for these benefits, the only thing required is that you must be a bona fide resident of the island. The island not only has an attractive tax environment for individuals, but it also has a friendly tax policy for businesses. Businesses operating on the island only have to pay 4% tax on their income. An important thing to note here is that only cryptocurrencies acquired and sold while living on the island are tax exempt. What else can a cryptocurrency entrepreneur expect from a cryptocurrency haven?
4. Cryptocurrency Mining in Puerto Rico: What You Should Know
Puerto Rico is becoming a hotspot for cryptocurrency mining. What could be the reason? Surely, Act 60 would be the main one. Blockchain activities, such as mining, attract a minimum tax of 4%. Companies involved in these areas are eligible for “export services incentives”. A cryptocurrency miner in Puerto Rico pays a much lower tax than a cryptocurrency miner in the continental United States. Therefore, cryptocurrency miners in Puerto Rico have a clear advantage over their counterparts in the continental United States. This explains why the island is slowly becoming the most sought-after destination for cryptocurrency mining companies.
5. Timeline of Cryptocurrency Regulation in Puerto Rico
2012: Puerto Rico introduced Act 20 (Promotion of Export Services) and Act 22 (Transfer of Individual Investors) to attract investment with tax breaks.
2017: The island has gained popularity among cryptocurrency investors, attracted by tax incentives.
2019Law 60 consolidated previous laws into a single Incentives Code.
2021: Many cryptocurrency companies and investors have moved to the island to take advantage of the favorable tax regime.
Final note
The phrase “If you’re tired of high taxes in the US, move to Puerto Rico” is gaining traction, especially among cryptocurrency enthusiasts. Act 60 has successfully attracted significant investment to the island, fostering a growing cryptocurrency community. However, it is essential to balance the economic benefits with the angles of local residents, especially issues like gentrification. The hope is that this influx of investment will lead to economic growth and improve the lives of the people of the island. If successful, Puerto Rico could become a model of how liberal cryptocurrency regulations can have a positive impact on an economy and a community.