Puerto Rico
Retail_Trading_Status
- Analysis ID
- #763
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- Created
- 2025-12-12 05:09
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- 3d68a824...
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Executive Summary
Cryptocurrency trading is legal in Puerto Rico and formally regulated by the Office of the Commissioner of Financial Institutions (OCIF). Service providers, including exchanges and ATM operators, must obtain a Money Transmitter License under Act 136-2010, as explicitly clarified by Circular CIF-CC-2021-03. The territory is a well-known crypto hub due to Act 60, which offers 0% capital gains tax for bona fide residents on assets acquired after establishing residency.
Key Pillars
Office of the Commissioner of Financial Institutions (OCIF) - Primary Regulator
Act 136-2010 (Money Services Business Act) - Licensing Framework
Circular CIF-CC-2021-03 - Explicit inclusion of crypto under MSB rules
Act 60 (formerly Act 22) - Tax Incentives Code
FinCEN Registration - Federal AML/KYC compliance required
Landmark Laws
Circular CIF-CC-2021-03 (CIF-CC-2021-03) - Enacted: 2021-04-22
- Explicitly mandates that businesses handling 'convertible virtual currency' (including exchanges and BTMs) must obtain a Money Transmitter License from OCIF.
- Source
Act to Regulate Money Services Businesses (Act No. 136-2010) - Enacted: 2010-09-21
- The foundational law governing money transmitters; crypto assets are interpreted as falling under its jurisdiction for licensing purposes.
- Source
Puerto Rico Incentives Code (Act 60-2019) - Enacted: 2019-07-01
- Consolidates tax incentives; provides 0% capital gains tax on crypto assets for bona fide residents (acquired post-residency).
- Source
International Financial Center Regulatory Act (Act 273-2012) - Enacted: 2012-09-26
- Regulates International Financial Entities (IFEs), allowing them to offer crypto custody and trading services to non-residents.
Considerations
Federal Overlay: Puerto Rico is subject to U.S. federal laws (FinCEN, SEC, CFTC); federal agencies have jurisdiction.
Tax Residency: 0% capital gains tax applies only to bona fide residents; pre-move gains are subject to U.S. federal tax.
Banking Access: While some IFEs are crypto-friendly, traditional local banks may still be hesitant to bank crypto businesses.
Enforcement: OCIF actively enforces licensing rules, evidenced by the Cease and Desist order against Athena Bitcoin in 2022.
Notes
Puerto Rico is unique as it is a U.S. jurisdiction (federal law applies) but has fiscal autonomy (local tax laws differ). This creates a 'best of both worlds' scenario for U.S. citizens who move there: U.S. legal protections with offshore-style tax rates.
Remaining Uncertainties
- The exact timeline for processing new crypto-related MTL applications can be lengthy.
- Potential future changes to Act 60 tax benefits due to political pressure from the U.S. mainland.
Detailed Explanation
Detailed Explanation
Cryptocurrency trading is legal and formally regulated in Puerto Rico. The primary regulatory authority is the Office of the Commissioner of Financial Institutions (OCIF), which oversees the licensing and supervision of cryptocurrency service providers. The foundational regulatory framework is established by Act 136-2010, the Money Services Business Act, enacted on September 21, 2010, which governs money transmitters. The application of this Act to cryptocurrency businesses was explicitly clarified by Circular CIF-CC-2021-03, issued on April 22, 2021, which mandates that any business handling 'convertible virtual currency,' including exchanges and Bitcoin ATM operators, must obtain a Money Transmitter License from OCIF. This creates a clear, license-based regulatory regime for service providers operating in the territory. The regulatory environment is further shaped by Puerto Rico's unique status as a U.S. jurisdiction with fiscal autonomy, creating a dual-layer system where local and federal rules coexist. On the local level, Act 60-2019, the Puerto Rico Incentives Code enacted on July 1, 2019, provides a significant 0% capital gains tax incentive for bona fide residents on cryptocurrency assets acquired after establishing residency, which has made the territory a notable crypto hub. Furthermore, the International Financial Center Regulatory Act (Act 273-2012), enacted on September 26, 2012, allows International Financial Entities (IFEs) to offer crypto custody and trading services to non-residents, adding another regulated channel for crypto activity. Compliance for licensed entities is stringent and multi-layered. Beyond the OCIF license, businesses must also comply with U.S. federal anti-money laundering regulations, including registration with FinCEN. The regulatory framework is actively enforced, as evidenced by OCIF's cease and desist order against Athena Bitcoin in 2022 for operating without a license. However, important restrictions and limitations exist. The 0% capital gains tax under Act 60 applies only to bona fide residents and only to gains from assets acquired after establishing residency; gains accrued prior to the move remain subject to U.S. federal taxation. Additionally, while some IFEs are crypto-friendly, traditional local banks often remain hesitant to provide banking services to cryptocurrency businesses, creating an operational challenge. The federal overlay means that U.S. agencies like the SEC and CFTC also maintain jurisdiction, adding another layer of potential regulatory scrutiny for market participants.
Summary Points
I. Regulatory Status
* Cryptocurrency trading is legal and formally regulated in Puerto Rico.
* Status: Allowed-Regulated.
II. Key Regulatory Bodies
* Office of the Commissioner of Financial Institutions (OCIF): The primary local regulator for cryptocurrency service providers.
* Federal U.S. Agencies (FinCEN, SEC, CFTC): Maintain jurisdiction and impose an additional federal compliance layer.
III. Important Legislation
* Circular CIF-CC-2021-03 (Enacted: 2021-04-22)
* Explicitly mandates that businesses handling 'convertible virtual currency' must obtain a Money Transmitter License from OCIF.
* Act to Regulate Money Services Businesses (Act No. 136-2010) (Enacted: 2010-09-21)
* The foundational law for licensing money transmitters; crypto assets are interpreted as falling under its jurisdiction.
* Puerto Rico Incentives Code (Act 60-2019) (Enacted: 2019-07-01)
* Provides 0% capital gains tax on crypto assets for bona fide residents (applies to assets acquired after establishing residency).
* International Financial Center Regulatory Act (Act 273-2012) (Enacted: 2012-09-26)
* Regulates International Financial Entities (IFEs), permitting them to offer crypto custody and trading services to non-residents.
IV. Compliance Requirements
* Licensing: Cryptocurrency exchanges, ATM operators, and other service providers must obtain a Money Transmitter License from OCIF under Act 136-2010.
* Federal AML/KYC: Businesses must register with and comply with U.S. FinCEN regulations.
* Tax Compliance: Residents must adhere to the specific conditions of Act 60 to qualify for the 0% capital gains incentive.
V. Notable Restrictions or Limitations
* Tax Residency Condition: The 0% capital gains tax under Act 60 applies only to bona fide residents and only to gains from assets acquired after establishing residency; pre-move gains remain subject to U.S. federal tax.
* Banking Access: While some IFEs are crypto-friendly, traditional local banks are often hesitant to provide banking services to cryptocurrency businesses.
* Federal Overlay: Puerto Rico is subject to U.S. federal laws and enforcement actions from agencies like the SEC and CFTC.
VI. Recent Developments or Notes
* Enforcement Action: OCIF actively enforces licensing rules, as evidenced by a Cease and Desist order against Athena Bitcoin in 2022.
* Unique Jurisdictional Status: Puerto Rico is a U.S. jurisdiction (federal law applies) but has fiscal autonomy (local tax laws differ). This creates a scenario offering U.S. legal protections with offshore-style tax rates for qualifying residents.
* The territory is a well-known crypto hub largely due to the tax incentives provided by Act 60.
Full Analysis Report
Full Analysis Report
Puerto Rico has established itself as a 'Allowed-Regulated' jurisdiction for cryptocurrency, balancing strict licensing requirements for intermediaries with highly attractive tax incentives for individual investors. The primary regulatory body, the Office of the Commissioner of Financial Institutions (OCIF), oversees the sector under the framework of the Money Services Business (MSB) Act (Act 136-2010). In April 2021, OCIF issued Circular CIF-CC-2021-03, which explicitly clarified that any entity facilitating the transfer or exchange of 'convertible virtual currency'—including crypto exchanges and Bitcoin Teller Machines (BTMs)—must obtain a Money Transmitter License (MTL). This removed any ambiguity regarding the necessity of licensure.
The licensing process is rigorous, mirroring U.S. state-level requirements. Applicants must demonstrate a minimum net worth of $500,000, maintain liquid assets of at least $100,000, and post a surety bond of $500,000. Furthermore, because Puerto Rico is a U.S. territory, all crypto businesses must also register with the Financial Crimes Enforcement Network (FinCEN) at the federal level and comply with the Bank Secrecy Act (BSA), including strict AML/KYC obligations. OCIF has demonstrated its commitment to enforcement; notably, in September 2022, it issued a Cease and Desist order against Athena Bitcoin for operating BTMs without the required license, signaling that unregulated operation is not tolerated.
Beyond retail exchanges, Puerto Rico has a unique framework for International Financial Entities (IFEs) under Act 273-2012. These entities can be licensed to provide sophisticated financial services, including digital asset custody and trading, primarily to non-resident clients. Several IFEs, such as FV Bank, have successfully obtained authorization to offer integrated banking and crypto services, bridging the gap between traditional finance and the digital asset economy.
For individual retail traders, the regulatory environment is defined by Act 60 (formerly Act 22). This legislation provides a powerful incentive for crypto investors to relocate to the island. Bona fide residents who meet specific physical presence and connection tests are exempt from Puerto Rico income tax on capital gains (0% rate) for assets acquired and sold after establishing residency. However, investors must be aware that gains accrued prior to moving remain subject to U.S. federal taxation, and the IRS actively scrutinizes residency claims to prevent tax evasion.
Puerto Rico has established itself as a 'Allowed-Regulated' jurisdiction for cryptocurrency, balancing strict licensing requirements for intermediaries with highly attractive tax incentives for individual investors. The primary regulatory body, the Office of the Commissioner of Financial Institutions (OCIF), oversees the sector under the framework of the Money Services Business (MSB) Act (Act 136-2010). In April 2021, OCIF issued Circular CIF-CC-2021-03, which explicitly clarified that any entity facilitating the transfer or exchange of 'convertible virtual currency'—including crypto exchanges and Bitcoin Teller Machines (BTMs)—must obtain a Money Transmitter License (MTL). This removed any ambiguity regarding the necessity of licensure. The licensing process is rigorous, mirroring U.S. state-level requirements. Applicants must demonstrate a minimum net worth of $500,000, maintain liquid assets of at least $100,000, and post a surety bond of $500,000. Furthermore, because Puerto Rico is a U.S. territory, all crypto businesses must also register with the Financial Crimes Enforcement Network (FinCEN) at the federal level and comply with the Bank Secrecy Act (BSA), including strict AML/KYC obligations. OCIF has demonstrated its commitment to enforcement; notably, in September 2022, it issued a Cease and Desist order against Athena Bitcoin for operating BTMs without the required license, signaling that unregulated operation is not tolerated. Beyond retail exchanges, Puerto Rico has a unique framework for International Financial Entities (IFEs) under Act 273-2012. These entities can be licensed to provide sophisticated financial services, including digital asset custody and trading, primarily to non-resident clients. Several IFEs, such as FV Bank, have successfully obtained authorization to offer integrated banking and crypto services, bridging the gap between traditional finance and the digital asset economy. For individual retail traders, the regulatory environment is defined by Act 60 (formerly Act 22). This legislation provides a powerful incentive for crypto investors to relocate to the island. Bona fide residents who meet specific physical presence and connection tests are exempt from Puerto Rico income tax on capital gains (0% rate) for assets acquired and sold after establishing residency. However, investors must be aware that gains accrued prior to moving remain subject to U.S. federal taxation, and the IRS actively scrutinizes residency claims to prevent tax evasion.
Source Evidence
Primary and secondary sources cited in this analysis
"The purpose of this Circular Letter is to provide for the licensing requirement for all money service businesses, including those that handle crypto currency... such as Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Cardano, Tether, among others."
"Athena has continued its commercial operations in Puerto Rico knowing that it does not possess a license validly issued by the OCIF, as required by law."
"Resident Individual Investors... shall be 100% exempt from income taxes... on the net long-term capital gain."
"Crypto and virtual currency companies that receive money for transmission or exchange digital assets fall under the definition of a Money Services Business in Puerto Rico."
"FV Bank International was granted regulatory approval to handle deposits and transactions in Bitcoin, Ethereum and other digital currencies."
Web Sources (7)
Sources discovered via web search grounding
Search queries used (5)
- Puerto Rico crypto exchange money transmitter license requirements
- Puerto Rico Act 60 crypto tax incentives
- Puerto Rico cryptocurrency regulation OCIF
- Puerto Rico International Financial Entities crypto regulation
- OCIF Circular 2021-03 cryptocurrency
https://en.wikipedia.org/wiki/Cryptocurrencies_in_Puerto_Rico
https://blog.upay.best/crypto-adoption/puerto-rico/
https://mielogroup.com/licensing-crypto-and-virtual-currency-businesses-in-puerto-rico-what-you-need-to-know/
https://mielogroup.com/understanding-puerto-ricos-financial-services-regulations-a-comprehensive-guide/
https://banklicense.pro/comprehensive-guide-to-establishing-or-acquiring-an-international-financial-entity-ife-in-puerto-rico-in-2025/
https://www.hklaw.com/en/insights/publications/2025/11/puerto-ricos-act-60-income-sourcing-and-irs-scrutiny
https://coinledger.io/blog/puerto-rico-crypto-tax