Democratic lawmakers push bill to end crypto tax breaks in Puerto Rico

Source Cryptopolitan

Democratic lawmakers introduced new legislation on Monday to eliminate Puerto Rico’s allure as a crypto tax haven.

The Fair Taxation of Digital Assets in Puerto Rico Act of 2025 was introduced by Representative Nydia Velázquez of New York. The measure aims to fill a loophole allowing crypto investors to pay no federal taxes by moving to the island.

Currently, residents of Puerto Rico who are considered bona fide residents of the island can pay little or no local or federal taxes on their capital gains, including profits earned from cryptocurrency trading, under Act 60. This policy has drawn thousands of wealthy investors over the past decade.

The proposed law would add a provision to the Internal Revenue Code requiring that digital asset income earned by Puerto Rico residents be taxed under the same federal rules as income earned on the U.S. mainland.

Lawmakers blame crypto investors for inflating living costs

The influx of crypto-investors has reportedly done more damage than good to the local Puerto Rico population, according to Velázquez and other lawmakers.

Instead of strengthening the economy, they say, an influx of rich crypto traders has inflated living costs, particularly in property markets.

“This wave of crypto investors hasn’t helped Puerto Rico’s recovery or strengthened the local economy,” Velazquez said.

According to her, it has only driven up housing costs, pushed out local residents, and added pressure to an island where nearly 40% of people live in poverty — all while costing the federal government billions in lost tax revenue.

The Joint Committee on Taxation said that the tax breaks for investors will cause the federal government to lose an estimated $4.5 billion in revenue between 2020 and 2026.

The economic divide is becoming more apparent in cities such as San Juan, where the signs of luxury real estate developments have multiplied even as many local families cope with high rents and limited options for work.

Earlier this month, Puerto Rico’s new governor, Jenniffer González, proposed slightly tightening Act 60. Her proposal would keep the benefits in place until 2055 but would apply a 4% tax over new applicants’ capital gains — still far lower than the 20–37% rates that many crypto investors would pay on the mainland.

Crypto defenders struggle to preserve the breaks

Proponents of the existing tax regime say it has attracted much-needed investment and innovation to Puerto Rico. Rich newcomers, they say, are helping build a more robust technology and finance sector, create jobs, and modernize the island’s economy.

Crypto advocates say that without the tax breaks, these investors would have gone elsewhere with their money.

But critics are skeptical, noting that most benefits have gone to the wealthy, not to average Puerto Ricans.

The political road ahead for the bill appears murky. Republicans have historically favored lower taxes and seem unlikely to sign off on a piece of legislation they view as anti-crypto.

Adding another twist to the political poker game, President Donald Trump recently embraced cryptocurrencies. He has vowed to undo regulations that are suffocating the digital asset sector.

Velázquez’s bill faces an uphill battle with Congress focused on broader tax arguments.

Still, the effort underscores mounting tensions over balancing innovation versus fairness and economic justice — not just in Puerto Rico but nationally.

Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Hedera Price Analysis: HBAR defies $50B market dip as Nvidia confirms AI partnershipHedera maintains strength above $0.15, signaling investor confidence as NVIDIA’s AI integration boosts long-term bullish sentiment and breakout potential.
Author  FXStreet
Apr 09, Wed
Hedera maintains strength above $0.15, signaling investor confidence as NVIDIA’s AI integration boosts long-term bullish sentiment and breakout potential.
placeholder
Ripple’s $21 Trillion Dream: What Capturing 20% Of SWIFT Volume Means For XRPRipple Labs, a crypto payments company, continues to set its ambitions and those of XRP higher than ever as it edges closer to disrupting the global financial messaging giant SWIFT. After Ripple CEO
Author  NewsBTC
Jul 14, Mon
Ripple Labs, a crypto payments company, continues to set its ambitions and those of XRP higher than ever as it edges closer to disrupting the global financial messaging giant SWIFT. After Ripple CEO
placeholder
OpenAI Introduces Lowest-Cost ChatGPT Subscription in India with UPI Payment OptionOn Tuesday, OpenAI introduced ChatGPT Go, its most affordable AI subscription tier, targeting the price-sensitive Indian market. Nick Turley, OpenAI’s Vice President and Head of ChatGPT, announced the launch via an X post, highlighting that users can pay through India’s Unified Payments Interface (UPI).
Author  Mitrade
Aug 19, Tue
On Tuesday, OpenAI introduced ChatGPT Go, its most affordable AI subscription tier, targeting the price-sensitive Indian market. Nick Turley, OpenAI’s Vice President and Head of ChatGPT, announced the launch via an X post, highlighting that users can pay through India’s Unified Payments Interface (UPI).
placeholder
ANZ Raises Gold Price Forecast to $3,800/Oz, Predicts Rally to Continue Through 2026Gold is expected to continue its upward momentum throughout 2025 and into early 2026, driven by ongoing geopolitical tensions, macroeconomic challenges, and market anticipation of U.S. monetary easing, according to analysts from ANZ in a research note released Wednesday.
Author  Mitrade
Sept 10, Wed
Gold is expected to continue its upward momentum throughout 2025 and into early 2026, driven by ongoing geopolitical tensions, macroeconomic challenges, and market anticipation of U.S. monetary easing, according to analysts from ANZ in a research note released Wednesday.
placeholder
Samsung Electronics Forecasts Stronger-Than-Expected Q3 Profit on AI Demand Samsung forecasts Q3 profit of 12.1 trillion won, boosted by strong AI chip demand.
Author  Mitrade
Oct 14, Tue
Samsung forecasts Q3 profit of 12.1 trillion won, boosted by strong AI chip demand.
goTop
quote