In March of 2021, David and his family moved to Puerto Rico. The 36-year-old, who has been involved in the coin industry since 2012 says the decision to relocate from Austin was kind of a no-brainer.
The U.S. territory of Puerto Rico has a lot of tax breaks for people who spend a lot of time on the island. Residents don't have to pay taxes on capital gains if they keep their American passports. It helped seal the deal, though for him, the bigger incentive was the fear of missing out.
All my friends are there. He said that many of his California friends have also moved to Puerto Rico because he didn't have one friend left in New York.
After seeing his friends and colleagues leave, he went to check it out.
The small island territory, which can be driven in half a day, was the first thing that came to his mind. The island has three million people.
Puerto Rico is similar to Austin in 2012 according to Johnston. He says the city felt small before tech companies like Apple, Apple, andSamsung helped turn it into a tech hub. Austin had a lot of passionate people moving there, which accelerated over time like in Puerto Rico. Making the move to Puerto Rico feels like getting in on the ground floor.
That is where my community is. The people I know and love are going there to build something cool. I love that open source helps everyday people. That is what I love about the technology. He said it was open to everyone.
The home of David and his daughter is in the San Juan suburb of Guaynabo.
Puerto Rico is the new hot destination for the crypto contingent.
The New York Times reported that, in order to hang with her friends on the island, she moved from San Francisco to Puerto Rico last year. Brock Pierce, a child actor who starred in the movie "Mighty Ducks", is a 2020 independent presidential candidate.
The whole office building is filled with start-ups.
There is a co-working space on the sixth floor and a fund on the fifth floor. My company took over the eighth floor and NFT.com took over the twelfth floor. In the last 12 months, that happened.
The American territory has an office for the fund that invests in the digital currency.
Act 60, which offers significant tax savings to qualified residents, is the main draw to the island.
In the U.S., investors pay as much as 37% on short-term capital gains and up to 20% on long-term gains, which applies tocryptocurrencies and other assets held for more than a year. If certain qualifications are met, Act 60 drops the tax obligation down to zero. This is huge for entrepreneurs.
There is a tax incentive for business owners to set up shop in Puerto Rico. The federal and state tax on companies in the mainland is 21% and varies. If a firm exports its services out of Puerto Rico, they pay a 4% corporate tax rate in the U.S.
The family is celebrating Christmas in Puerto Rico.
The standard capital gains tax rates on the US mainland are still applicable to any gains realized before arriving to Puerto Rico. Gains earned after becoming a Puerto Rican resident are not subject to taxes.
Chandrasekera, who heads tax strategy at coin tracker.io, said that people are not talking about that part of the tax code.
There is a way to get around it.
If an investor has a certain amount of gain, they can go to Puerto Rico, establish residency, sell their stake, and then buy it back as a new position. They don't want to muddy the waters with gains they carry over from the U.S.
The tax rules for Puerto Rico were created a decade ago to help bring in people and money when the island was losing residents and money.
Over the last several years, the territory has been hit by earthquakes, hurricanes, a multi-year bankruptcy and a global pandemic. The government is relieved that investors are coming in at a record pace.
New Puerto Ricans have been helped by Giovanni Mendez. He tells CNBC that in the last six years, the number of clients he has has increased by over 50%.
In March 2020, as the Covid epidemic began to shut down countries around the world, he began speaking with clients about moving to Florida, a tax-free state. Many chose Puerto Rico.
A lot of people just decided to pull the trigger, even though I wasn't expecting a lot of people to move with everything going on with the Pandemic. The increase in the value ofcryptocurrencies is a result of that.
George Burke is an investor in Puerto Rico.
George Burke finally made the move last year after considering it for a long time.
Puerto Rico became a good option for Burke because he knew he needed to make a change with the performance of his company.
Burke wouldn't give an exact dollar figure, but he did say that his holdings rise to the mid-seven figure range. There were only 6,000 people who were able to participate in the crowd sale of ethereum, according to Burke, who worked on the first bitcoin debit card back in 2013).
Burke says the move was easy.
He said that he got on a plane, established his residency the same day he got off the plane, and started the clock.
Burke didn't have to apply before he arrived. He paid an attorney $15,000 to help with his business exemption after he put in an app for the individual investor.
It took between six and nine months for it to go through all the perfunctory reviews, but it didn't take a huge amount of effort.
"I mean, it's America," said Johnston. You do not need a visa. You do not have to apply for residency. You do not need a passport. You can open an office in downtown San Juan, buy a house, and get a driver's license by grabbing a domestic flight.
He said it was smooth.
Old San Juan has El Morro Fort.
Before moving to Puerto Rico, Theodore Agranat told CNBC that he had no idea that it was an American territory. He recalled seeing pictures of Donald Trump throwing paper towels into a crowd.
After speaking with friends who had moved to Puerto Rico and making a scouting trip himself last spring, the 45 year old felt like the place could be the kind of place he had been looking for since his first son was born in 2003: a community of entrepreneurs with kids. He found it in the city of Humacao.
The financial incentives were a huge draw for Agranat, who runs an early-stage fund that put money into over 200 projects last year.
Island life is going well so far.
Agranat and his wife home-school their three children, and for their 14-year-old, they have tailored the curriculum to include topics related to cryptocurrencies.
The San Juan suburb of Guaynabo has adopted a similar approach. He and his wife home-school all of their children, and since day one has been a part of the lesson plan.
My kids have DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch When grandma tried to pay them in cash once, they said no thanks. I prefer the digital currency.
Outside of the suburbs, many gather for a weekly meet-up at nice hotels and restaurants in the capital, which covers topics like NFTs, Defi, and how to open your own wallet. Hundreds of locals have begun to attend those gatherings, which are now being offered in Spanish.
Since the last bull run of the digital currency, Burke and his friends and colleagues have been moving to Puerto Rico, and every Thursday he attends a luncheon with around 30 to 40 other people who are also in the same boat.
Puerto Rico is moving closer to requiring vaccinations for visitors after easing restrictions for vaccine travelers.
Some people are not happy about the new residents.
The capital gains tax exemption for non-Puerto Ricans has strained relations between locals. An organization called #AbolishAct60 is using social media to push back on tax breaks.
There is a question as to whether the tax breaks are achieving what the government set out to do, including, among other things, creating jobs, and sinking more cash into the local economy.
Real estate prices have gone up because of the flood of the rich into Puerto Rico.
The lack of inventory and high demand has resulted in prices that have never been seen before in Puerto Rico.
Fournier told CNBC that there are other properties on the market for $27 million, $30 million, and that there are properties in Dorado Beach that have been sold for more than $20 million.
The rising cost of living has fanned the flames of resentment.
Keiko Yoshino moved to Puerto Rico after seven years in Washington, D.C., and is trying to close the divide by running programs that pull the two groups together. The tax incentive program set out to do this in the first place.
She runs the Puerto Rico Blockchain Trade Association and plays a major role in planning and running meet-ups.
Yoshino said that he had been called a colonizer. I am not a rich person. I worked for the government for seven years. We need to work on stereotypes going both ways. It is not a political issue in the way that I like it. It does not need to be a social issue. It is an opportunity to build a community.
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