Dems aim at Puerto Rico tax perks for crypto investors

Democratic lawmakers on Monday introduced a bill to block investors from using Puerto Rico as a cryptocurrency tax haven — a proposal unlikely to advance without Republican support and as Congress prioritizes extending the 2017 tax cuts.

Under current laws, qualified investors living in the U.S. Commonwealth are not required to pay local or federal taxes on capital gains, including crypto appreciation. That tax break — part of a broader package of tax incentives known as Act 60 — has made the island a haven for thousands of digital currency enthusiasts.  

The bill introduced by New York Representative Nydia Velazquez and other Democratic lawmakers comes as President Donald Trump has been embracing crypto and promised to slash regulations that affect digital assets.

If passed, the Fair Taxation of Digital Assets in Puerto Rico Act of 2025 would add a new section to the Internal Revenue Code that would make digital-asset income on the island subject to federal rules.

In a statement to Bloomberg News, Velazquez said the bill will close a critical loophole, "making sure everyone plays by the same rules."

"This wave of crypto investors hasn't helped Puerto Rico's recovery or strengthened the local economy," Velazquez said. "Instead, it's 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."

According to Velazquez's office, Puerto Rico will lose an estimated $4.5 billion in revenue from 2020 to 2026 due to tax breaks for wealthy investors.  

Earlier this month, Governor Jenniffer Gonzalez presented a package of measures that would extend Act 60 benefits through 2055, but also require new applicants for the incentives to pay 4% on capital gains. By contrast, cryptocurrency holders on the U.S. mainland might pay as much as 20% and 37% on long-term and short-term capital gains, respectively, according to Velazquez's office. 

Crypto boosters say the tax breaks are drawing high net-worth individuals with fintech expertise to the struggling island. Among those who call Puerto Rico home are Dan Morehead, the founder of Pantera Capital, a crypto-focused investment firm; crypto evangelist Brock Pierce; and YouTube celebrity and sometime digital-asset promoter Jake Paul.