Public number: Metacosmic observation
The object of this meow's observation today is Puerto Rico, the United States Free Federation in the Caribbean Sea
（Free Associated State of Puerto Rico）
This island state that usually does not have a sense of existence,
Why it has become the preferred destination for rich people in the "currency circle" to move,
Even led to the migration and concentration of the cryptocurrency industry?
btw, in Spanish,
The word Puerto Rico is what it means
"Rich Port".
In March 2021, David Johnston, a 36-year-old cryptocurrency entrepreneur and investor, relocated his parents, wife, three daughters, and the entire company to Puerto Rico along with himself.
David entered the cryptocurrency industry around 2012, and in his opinion, moving from Texas capital Austin to the island state was a completely brainless decision.
Needless to say, Puerto Rico's year-round picturesque tropical coastline also has a very friendly coin circle policy, such as high tax breaks for residents who live on the island for more than 183 days a year. Island residents can continue to hold U.S. passports without paying any capital gains tax. That alone was enough to make David make up his mind. Although for him, the greater motivation for decision-making is actually the fear of missing out on this hot spot in the circle.
"All my friends are coming. I don't have any friends left in New York, and maybe the pandemic has accelerated all this, and everyone I know has moved to Puerto Rico. David also mentioned that many of his California friends have also moved to Puerto Rico.
Seeing that his friends and colleagues were all emigrating, he also caught up with the boom in early 2021.
The first time he set foot on this small island, David understood in seconds. Here, the island is small enough to change a lot in half a day; the island has 3 million inhabitants, and it's big enough to build a science and technology center. ”
David says Puerto Rico today reminds him of Austin in 2012. Before big companies like Tesla, Samsung, and Apple turned Austin into the hottest tech industry hub in the United States, Austin was small. Like Puerto Rico today, Austin was full of energy and attracted a large number of enthusiastic talents. For David, this move to Puerto Rico felt like everyone had a place in Austin.
David Jorston's daughters were in front of their home on the outskirts of San Juan, the capital of Puerto Rico. Image source/courtesy of respondents
David concluded: "[Puerto Rico] has my social circle, I have friends I know and like, and they're going to do some cool things here, things that can help a lot of people, and that's what I love about open source, that's why I love blockchain — it's open to everyone." ”
1 Island welfare is more
Puerto Rico has quickly become the latest popular destination for currency industry practitioners.
Frances Haugen, Facebook's "whistleblower," once told The New York Times that she bought cryptocurrencies "at the right time" and has now moved from San Francisco to Puerto Rico to meet her friends on the island.
Controversial YouTube influencer and NFT investor Logan Paul opened a store in Puerto Rico; also opened a store in Puerto Rico, a billionaire, former child star Brock Pierce and a 2020 U.S. presidential independent candidate.
David Jorston says his entire office building is now packed with a wide variety of cryptocurrency startups.
Pantera Capital (a cryptocurrency fund) has offices on the 5th floor and a portion of the shared space on the 6th floor. My company, DLTx, was on the eighth floor; NFT.com rented the entire 12th floor. It's all happened in just the last 12 months. ”
Redwood City Ventures, a venture fund focused on investing in Bitcoin and blockchain companies, has also opened an office in the U.S. Free State.
For many, the island state's biggest attraction is Puerto Rico's Act 60, which provides significant tax incentives to eligible residents.
In the U.S., investors are subject to a short-term investment income tax at a rate of 37%, and a 20% tax on long-term investment income (for those who have held cryptocurrency assets for more than one year). Under The Tax Breaks under Act 60, also known as the Individual Investor Act, this minimum tax payment can be reduced to zero. For entrepreneurs and traders, this is undoubtedly a huge temptation.
There is also a significant tax incentive for business owners in Puerto Rico. U.S. companies are generally subject to a federal corporate tax rate of 21 percent, plus state taxes at different rates. If a Puerto Rican business provides export operations to the U.S. mainland, or exports to any other place, they only pay a 4% corporate tax.
The David Steadton family celebrates Christmas in the mountains of Puerto Rico. Image source/Image courtesy of respondent
CPA Letter Shehan Chandrasekera cautioned that all gains generated before arriving in Puerto Rico are still taxed according to U.S. policy. Tax deductions were only available for gains made after becoming residents of Puerto Rico.
"That's something that a lot of people won't tell you." Shihan-Chandraskla said. She currently serves as Head of Fiscal Strategy at CoinTracker.io. a cryptocurrency tax software company.
But there are ways to circumvent this limitation.
Assuming that an investor has received a certain income, he can travel to Puerto Rico, obtain residency, sell his equity, and then buy it back as a resident of Puerto Rico. In this way, he can avoid the problem of not being able to enjoy tax benefits for gains already earned in the United States.
2 Build an island to recruit talents
These seemingly rosy policies in Puerto Rico had been designed over the past 10 years to retain the loss of talent and investment.
In recent years, the island state has endured a series of doomsdays – earthquakes, tsunamis, years of government bankruptcies, and a global pandemic that has not survived. Today, the influx of investors is reaching an all-time high, which is a good economic relief for the local government.
Giovanni Mendez, a corporate tax lawyer, is dedicated to providing tax services to new residents coming to Puerto Rico. He told CNBC that nearly half of his clients are now cryptocurrency companies or investors, a number that has grown exponentially over the past six years.
Mendes grew up in a small town two hours' drive from Puerto Rico's capital. In March 2020, when the COVID-19 pandemic began to sweep the world and countries began to launch lockdowns, Mendes began advising his Florida clients to immigrate to Puerto Rico. In the end, quite a few customers made this choice.
"I didn't expect many customers to choose to move during the pandemic, but on the contrary, the pandemic has helped a lot of people make this decision," Mendes said. Of course, this is also related to the rapid growth of the cryptocurrency industry. ”
Cryptocurrency investor George Burke has been considering moving to Puerto Rico since 2018, only to make up his mind until 2021.
George did not disclose the amount of his assets, only mentioning that his cryptocurrency holdings have risen to seven figures. "I was involved in the crowdfunding of Ethereum... At that time, only about 6,000 people could participate. In 2013, George also worked on Bitcoin's first bank debit card.
For the move, George said the whole process was relatively straightforward: "I got on a plane, registered my residency on the same day, rented a room next to my friend's house, and that's how it started." ”
George also added that there is no need to apply in advance before arriving in Puerto Rico. He entered individual investor exemption information on an app and then paid a lawyer $15,000 to help him operate his company's business exemption.
For David, his experience was roughly similar. It took him about 6-9 months to do some not-so-rigorous audits, and it didn't take a lot of effort.
"This is the United States, you don't need a visa, you don't need to apply for residency, you can book a domestic flight, go directly to San Juan, apply for a driver's license, buy a house, and then open an office in the city center." The whole process went fairly smoothly. ”
3 Coin circle life
Before moving to Puerto Rico, Theodore Agranat, 45, knew nothing about the place, only that it belonged to the United States. In addition, I remember seeing trump throwing rolls of paper at the people during Hurricane Maria on tv footage.
After a personal field trip last spring after a chat with a friend, Tildo felt that Puerto Rico might be exactly where he had been looking since he became a father in early 2003: entrepreneurs and their families gathered in a community where they were open-minded, highly receptive to their children's education at home, and relatively healthy alternatives; and a startup incubator that linked the most business-minded and creative-minded people. He found such a place in Humacao, Puerto Rico.
Tildo, who manages an early blockchain investment fund that has invested in 225 projects last year, says high financial returns are also hugely attractive.
So far, life on the island has been quite good.
Tildo and his wife tutored their three children at home. For 14-year-olds, they customized a cryptocurrency course on topics including NFTs, cryptocurrency games, and token trading.
David took a similar approach. All three of his children are studying at home, and cryptocurrency has been a compulsory subject for all children from day one. "My kids have had cryptocurrency wallets since birth. When they helped their grandparents with housework, and the grandparents offered to give them pocket money as an encouragement, they would say: No, thanks, I want Bitcoin more. ”
Many cryptocurrency circles will attend "Cryptocurrency Monday" gatherings, held every week in high-end hotels or restaurants; there are also "cryptocurrency curiosities" activities, mainly for newcomers to the cryptocurrency circle to popularize NFTs, decentralized finance (DeFi), how to open your cryptocurrency wallet and other topics. Hundreds of local residents have also begun to participate in such gatherings, and now Spanish-language activities are open.
George says he and his friends attend a luncheon for 30-40 people every Thursday, a circle of cryptocurrency-minded people who basically live by the beach or in the old town.
Street view of Puerto Rico. Image source / Getty Images
4 Troubles for locals
Not everyone welcomes the influx of new residents.
Many locals were unhappy because they did not meet the tax exemption policies, which were provided to non-Puerto Ricans. Mendes told CNBC that the long-term capital gains tax rate for Puerto Rican natives is 15 percent, a huge difference that also makes relations between natives and outsiders even more strained. There was even an organization that launched a campaign on social media under the slogan #Repeal 60.
There is also a question mark about whether such preferential tax policies can really fulfill the government's demands, such as increasing employment opportunities and increasing investment in the local economy. Speaking to san Juan residents in December, economist and Nobel laureate Joseph Stiglitz said he was skeptical about how much economic benefit Bill 60 would bring to Puerto Rico.
The influx of wealthy people into Puerto Rico has also raised local housing prices.
"The shortage of stock properties combined with the high demand for home purchases has led to a record high in Puerto Rico," said a local real estate source: "I have been concerned about the real estate market for many years, I did not expect such a situation today... A dorado beach property can sell for up to $20 million. "And properties with prices of $27 million, $30 million or even $34 million abound.
Rising house prices and the increase in the cost of living have further ignited public discontent.
Keiko Yoshino worked for seven years in the Washington government before moving to Puerto Rico. She sought to bridge this divide by organizing events to promote knowledge sharing among natives and newcomers. Theoretically, this is also part of the tax incentive scheme.
Keiko Yoshino runs the Puerto Rico Blockchain Trade Association and is the main organizer of the aforementioned "Cryptocurrency Curious" campaign. More often than not, she wants to eliminate stereotypes about each other through such efforts.
"I was once called a 'cryptocurrency colonist,' and I didn't reach the level of freedom of cryptocurrency wealth. I was a government official for seven years and didn't get any incentive from it... We need to bridge the stereotypes on both sides, which is why I really like cryptocurrency: it's not politicized. Nor does it need to be a socialized issue. It is an opportunity, an opportunity to create community. ”