Puerto Rico, Taxes, and a Bitcoin Utopia

It’s tax time, and many Americans are waking up to the harsh reality of the gains on their crypto trades. The process is complicated, confusing, and costly. Everything from bitcoin purchases to airdrops are subject to capital gains tax, and the Internal Revenue Service (IRS) is lighting a fire under holders to collect what is owed.

In November, federal regulators ordered Coinbase to release records of users that had more than $20,000 in transactions between 2013-2015, impacting more than 14,000 traders.

It is no wonder crypto traders are looking for alternatives.

One group of crypto entrepreneurs, led by Brock Pierce of the Bitcoin Foundation, headed to Puerto Rico to escape some of the tax drama of the mainland. Their plan? To build a crypto-utopia. And the process has already begun.

Currently, the group, which they’ve named Sol, has already started the process of searching for properties on the island. “The Monastery,” a 20,000 square foot hotel the group has rented out, acts as Sol’s current home base, but the group has their eyes on an old naval facility, Roosevelt Roads, complete with its own airstrip and dock.
Monastery Art Suits, Old San Juan, Puerto Rico –Source: TripAdvisor

The idea is to build the infrastructure, both physical and digital, to create their own blockchain paradise. While the group of crypto millionaires is paying less in taxes on their earnings, they are also doing a lot to help the people of the island.

“Puerto Rico has been this hidden gem, this enchanted island that’s been consistently overlooked and mistreated. Maybe 500 years later we can make it right,” Matt Clemson, co-founder of Lottery.com, noted.

And in the wake of Hurricane Maria, which left over a million homes without power for months, and approximately $90-billion in damages, Puerto Rico is looking to attract businesses any way it can.
“A road in the Roseau area is littered with structural debris, damaged vegetation and downed power poles and lines.” – Source: Wikipedia

The influx of the crypto-rich could be a boon to the island, and with a strong desire to work with the island, locals have been relatively welcoming with the newcomers.

Richard Lopez, a local business owner said “I think it’s great. Lure them in with taxes, and they’ll spend money.”

Indeed, Puerto Rico’s tax policies are definitely a bonus for Sol.

Currently, the IRS does not require U.S. taxpayers to include income earned within Puerto Rico when the file, so long as they have lived in Puerto Rico for more than one year. Additionally, the government recently passed a bill allowing foreign businesses to operate on the island if they donate $5,000 per year to a Puerto Rican non-profit organization.

While the idea may seem grand, the idea that someone could potentially avoid taxes on billions in earnings may end up being too good to be true.

Despite a potential change in tax laws, however, Pierce and his group of crypto-millionaires are betting big on the island, hoping to make a positive impact in the process.

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