Decades of harmful policy choices by the United States Congress, combined with a devastating hurricane season have all but destroyed the economy of Puerto Rico. But where the Puerto Rican government and members of Congress have called on the United States to bail Puerto Rico out of their financial mess, some entrepreneurs are thinking bigger. And the entrepreneurial approach to the Puerto Rico problem won’t come at the expense of the taxpayer
While Bitcoin and other cryptocurrencies are currently down, this winter saw a boom in the crypto market, making many modest investors incredibly rich, if they played their cards right. This means that many young and idealistic investors now have the capital to invest in projects they are passionate about. And these investment opportunities are even more appealing if they present the opportunity to accumulate wealth. It is for this reason that many crypto investors are setting their sights on Puerto Rico.
Just a few weeks ago, Coin Agenda, the leading conference for crypto and blockchain investors, held a conference in San Juan, Puerto Rico. The setting for this conference was not random. In fact, in the coming months, many of these crypto investors will be leaving the convenience of the United States mainland and will try their luck in Puerto Rico.
A Crypto Utopia
Since early last summer, the crypto market has grown exponentially. While the holiday boom has calmed down over the last few months as natural market corrections have occurred, many people who invested wisely were able to maintain their new level of wealth. And with wealth creation comes the ability to spread that wealth and create value for others, which is why these new crypto investors have started a project called, “Sol.”
By investing this newfound wealth into the economy of Puerto Rico, these crypto investors have the opportunity to rebuild the U.S. territory while also creating wealth with new business endeavors. The idea is that with new wealth, comes limitless opportunities to create jobs and prosperity for the downtrodden in Puerto Rico.
These investors also hope to promote sustainable living by teaching locals how to grow their own food and produce renewable energy. But it does not end there, by introducing the people of Puerto Rico to the crypto economy, these investors hope to help the locals safeguard their financial futures. The hope is that “Sol” becomes one of the first cities to completely adopt the burgeoning crypto economy, setting the way for the rest of the world.
But there is another aspect of Puerto Rico that makes it especially appealing to these crypto investors: It’s a tax haven.
Puerto Rico’s Unique Tax Laws
While these crypto entrepreneurs are hoping to help rebuild Puerto Rico’s economy, there is another benefit. Puerto Rico has unique tax laws. Some even refer to it as a tax haven. As a territory of the United States, residents of the island enjoy some of the same “privileges” as mainlanders, the right to vote being one of them. But its unique status exempts its residents from having to pay an income tax.
While this fact on its own would be a huge relief to the burden of forced taxation, there is more to it. Cryptoassets used to largely ignored by the IRS. But after so many people made so much money, the government decided it wanted its cut. This is why a recent legal battle with Coinbase ended with the government gaining access to the exchange’s users. This means that all these new crypto millionaires will pay greatly when the taxman comes collecting.
But by relocating to Puerto Rico, these entrepreneurs and investors can avoid having their earnings stolen by the Federal government. Or so, many hope. However, going up against the United States government is quite a feat, especially since there is so much money in the crypto space. It is likely that the IRS will find some way to take its cut, but in the meantime, many crypto investors are hopeful.
And less money spent on taxes means more money that can be spent on efforts to rebuild Puerto Rico. While the future of the crypto world is still unfolding, it is undeniable that blockchain technology and cryptocurrencies are going to play a huge role in the economy. But if this Puerto Rican experiment turns out to be successful, we may see how powerful crypto can be in both alleviating poverty and making municipalities more self-reliant.