Over the past few years, as the number of cryptocurrency traders has ballooned, we’ve seen the rise of the crypto millionaire. Keen to avoid the tax rates in states like California and New York, some of these fortunate individuals are now opting to start new lives in Puerto Rico of all places.
There are several key reasons behind this sudden phenomenon, as CNBC explains. As well as the island’s obvious beauty, residents who live there for more than 183 days each year are entitled to huge tax breaks – which some speculate is the main reason behind Logan Paul's decision to relocate to the US territory last year.
In essence, new residents can keep their American passports while simultaneously not having to pay any tax at all on capital gains.
One man who took the opportunity to start a new life in the Caribbean, after making sizable sums from Crypto, is David Johnston. Back in March 2021, the crypto entrepreneur and investor moved his parents, wife and three daughters with him to Puerto Rico. According to the 36-year-old, the move was something of a no-brainer.
“That’s where all my friends are. I don’t have one friend left in New York, and maybe the pandemic accelerated this, but every single one of them has moved to Puerto Rico,” he told CNBC, noting that many of his Californian friends have also landed on the island.
“I said, ‘Wow, okay, I get it,’” Mr Johnston recalled of his first impression of the small island territory, whose circumference can be driven in half a day. “The island has three million people…This is big enough to build a tech center.”
He also adds that a lot of similarities can be drawn between Puerto Rico and the Austin, Texas he first moved to back in 2012. Long before the arrival of Tesla, Samsung and Joe Rogan, Mr Johnston claims that Austin was already fertile ground to become the next great US tech hub. He now speculates that Puerto Rico has a similar amount of potential.
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“That’s where my community is. That’s where the people I know and love are going, and they’re going there to build something cool. Something that helps everyday people, and that’s what I love about open source. That’s what I love about blockchain. It’s open to everybody,” he added.
There’s no getting around the fact that Puerto Rico is quickly becoming the place to be for many aspirational crypto and NFT traders. However, while some locals are seeing the benefits of the recent influx, others continue to raise concerns.
A key area of contention for many is the fact that the capital gains tax exemption is designed for non-Puerto Ricans – as the rate remains at 15 per cent for locals. Further to this, the arrival of the nouveau riche has had the added effect of driving up house prices on the island.
“The lack of inventory and the high demand has resulted in prices that we have never seen before in Puerto Rico,” Francisco Diaz Fournier of Luxury Collection Real Estate told CBNC.
“I’ve been tracking the markets for several years, and I was not expecting this…You have properties in Dorado Beach that have been sold for more than $20 million,” he claimed.