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The entrepreneur families in Puerto Rico are building a community centered around crypto.
A growing number of American crypto enthusiasts are moving to Puerto Rico to enjoy the territory’s crypto-friendly tax structure in the background of its tropical aesthetics. Some of the most notable names include investor David Johnston, Facebook whistleblower Frances Haugen, NFT buff Logan Paul, crypto investor George Burke and Alpha Crypto founder Theodore Agranat. Post pandemic, more and more crypto lovers are choosing Puerto Rico over other regions like Florida for a plethora of reasons. Though the primary motivation to choose the island region stems from the fact that it has some real tax-saving benefits for the entrepreneurs, there are some other minor factors too that come into play when these millionaires set out on their journey.
Why Is the Crypto Crowd Favouring Puerto Rico?
Some of the best tax-saving features that this US territory provides include massive tax breaks for those non-Puerto Rico citizens who are in the territory every year for at least 183 days. Known as the Individual Investors Act, the break comes under Act 60 and helps Americans to save on capital gain tax which translates into huge profits for their company in the future. A regular US citizen would pay almost 37% and 20% on short term gains and long-term gains respectively.
Apart from this huge incentive offered under Act 60, there are also benefits granted to those entrepreneurs whose company is based out of Puerto Rico. Unlike the companies in the mainland that pay 21% federal corporate tax in addition to state taxes, such a company with roots in the island country would end up paying 4% corporate tax when services are exported out of the region.
A more emotional motive behind shifting life to Puerto Rico related to the growing crypto community on the island that is making their counterparts in the mainland experience the fear of missing out. The island territory is slowly becoming a tech hub as multiple start-ups and crypto firms are taking root. Johnston’s remarks on how the entire office building is crawling with several start-ups support the claim.
Life on the Island
The entrepreneur families are building a community centred around all things crypto with many of them home-schooling their kids with the help of a customized curriculum heavily centred on blockchain and crypto. Interesting weekly meetups happen such as the Crypto Mondays and Crypto Curious wherein the crypto community comes together at hotels and restaurants to discuss topics related to DeFi, NFTs, crypto wallets and so on. The best part of these meetups is the growing attendance of locals.
The biggest reason behind the unpleasantness is that the locals do not qualify for the capital gains tax exemption. Some have come together to form an organization called #AbolishAct60 to end the disparity. Another section feels that the tax breaks have failed to deliver any economic benefits to the locals but instead, the migration has caused an increase in real estate prices and has raised the cost of living expenses. There are some Americans like Keiko Yoshino who are trying to build a bridge to help the community through crypto-based knowledge transfer. However, whether the program will bear any real fruits, only time will tell.