PANews reported on April 22 that according to Bloomberg, U.S. Representative Nydia Velázquez recently proposed the Puerto Rico Digital Asset Fair Taxation Act, which aims to prevent investors from using Puerto Rico as a cryptocurrency tax haven. The bill proposes to amend local tax laws to require certain investors to pay local and federal taxes on capital gains, including digital assets. Velázquez pointed out that crypto investors have pushed up local housing costs and forced residents to relocate, but have not promoted economic recovery, but have caused the federal government to lose billions of dollars in tax revenue.
Since the passage of Sections 20 and 22 of the Tax Incentives Act (later merged into Section 60) in 2012, Puerto Rico has become a tax haven for the crypto industry, attracting investors including Pantera Capital founder Dan Morehead and venture capitalist Brock Pierce. Data shows that the region may lose about $4.5 billion in tax revenue between 2020 and 2026. Although the Governor of Puerto Rico has proposed extending the tax benefits that expire in 2035 to 2055, applicants are required to pay a 4% capital gains tax, which is still far lower than the highest U.S. tax rate of 37%. It is unclear whether the bill proposed by Democratic lawmakers will gain enough support in the Republican-controlled House of Representatives and Senate. In the coming months, the two houses will also vote on stablecoin legislation and a regulatory framework for cryptocurrencies.
