US lawmaker proposes new tax rules for crypto investors in Puerto Rico

A bill introduced by New York Representative Nydia Velázquez aims to address the use of Puerto Rico as a tax haven for cryptocurrency investors.

The proposed legislation, called the Fair Taxation of Digital Assets in Puerto Rico Act, seeks to amend Puerto Rico’s Internal Revenue Code to require certain investors to pay both local and federal taxes on capital gains from digital assets.

According to an April 21 Bloomberg report, the bill would subject cryptocurrency income to federal tax laws, potentially reducing tax advantages currently available in Puerto Rico.

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

Puerto Rico has attracted crypto investors since 2012 by offering tax exemptions under Acts 20 and 22, which were later consolidated into Act 60.

Notable figures such as Pantera Capital founder Dan Morehead, venture capitalist Brock Pierce, and influencer Logan Paul have taken advantage of these incentives.

Velázquez’s office estimates that Puerto Rico could lose approximately $4.5 billion in tax revenue from 2020 to 2026 due to these incentives.

Meanwhile, Puerto Rico Governor Jenniffer González-Colón has proposed extending Act 60 until 2055 but with a 4% capital gains tax for new applicants, which is lower than the US federal rate that can reach up to 37%.

It remains uncertain whether Velázquez’s bill will gain traction in the Republican-controlled House and Senate.

Both chambers are expected to consider stablecoin legislation and broader crypto regulatory frameworks in the coming months.