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October 5, 2022
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Puerto Rico Is Being the Destination of American Crypto Millionaires

Puerto Rico is fast becoming a cryptocurrency haven for the rich, much to the resentment of some residents.

The arrival of cryptocurrency millionaires in Puerto Rico leaves residents fearful of being displaced, as reported by Bloomberg.

Wealthy expats, particularly those who made their fortunes from cryptocurrencies, are flooding the Caribbean island, making life “unsustainable” for locals.

The residential neighborhood of San Juan, located in northern Puerto Rico overlooking the Atlantic Ocean, is a magnet for wealthy foreigners. Since 2020, a real estate agent has sold all but one property in the area to expats.

In the last two years, all the buildings, except one that Margarita Gandia’s real estate agency sold in Old San Juan, went to a buyer on the American mainland or abroad.

The result is that property prices have soared recently, driving residents out of business. As expected, some Puerto Ricans are outraged by the situation. More so, the unequal tax treatment that attracts cryptocurrency millionaires to the island in the first place.

Cryptocurrency Millionaires Migrate to Puerto Rico

In 1898, Puerto Rico has became a US territory after the Spanish-American War. But as an unincorporated territory, Puerto Rico is neither a sovereign nation nor a US state.

US citizens do not need a residence permit to live in Puerto Rico. By spending 183 days there, Americans can establish residency and qualify for tax status.

The tax code “Act 60” means bona fide residents can pay zero capital gains tax, dividends and interest. This, combined with a beautiful landscape and tropical marine climate, is an attractive attraction for the nouveau riche with cryptocurrencies.

As published by Business Insider, a US cryptocurrency investor inferred that the current health crisis is a likely factor in all of this. He said he moved to Puerto Rico because all his friends did. Given that the trend started about two years ago, your presumption is reasonable.

That’s where all my friends are. I don’t have a friend in New York anymore, and maybe the pandemic has accelerated that, but they each moved to Puerto Rico.

Negative effect for Puerto Ricans

Not only are some Puerto Ricans shaken by rising property prices, which in the past two years have tripled in popular areas like San Juan, but they also feel hurt by unequal tax treatment.

While wealthy expats make full use of Law 60, locals don’t enjoy the same tax breaks. This has fueled the narrative that the government is “rolling out the red carpet” for foreigners at the expense of locals, as reported by Bloomberg.

But those perks aren’t available to those already living in the US, where most people pay capital gains taxes of around 15% and the economy has been in crisis for a decade.

At the same time, Puerto Rico faces economic difficulties, with 43% of the population living in poverty. The situation is exacerbated by the collapse of tourism due to the health crisis, according to The Borgen Project.

The head of Puerto Rico’s House Finance Committee, Jesus Santa, said the influx of wealthy expats is not a bad thing. But that shouldn’t be at the expense of the locals.

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