Tax Incentives and Cryptocurrency Create Polarizing Perceptions in Puerto Rico

SAN JUAN, Puerto Rico — Cryptocurrency and tax breaks have made for complicated conversations in Puerto Rico. According to the media portrayal, the island became a hot spot for this trending technology, but the actual situation looks quite different from what people have heard about in the States. 

Places like surfer-town Rincón and affluent Dorado have been painted as crypto and gentrification havens by outlets like The New York Times and Latino Rebels, with celebrities like Logan and Jake Paul making their way to the island. 

Waves Ahead Executive Director Wilfred Labiosa in San Juan has seen native Puerto Ricans get taken advantage of by wealthy Americans that are looking to benefit from tax incentives like Act 60. The Act provides tax exemptions for businesses and investors that are coming to, or already established on the island.

“You will get the tax break, I’m the face of the company,” said Labiosa, in a hypothetical business situation.

He explained that investors will come to the island and find a native as their business partner to make the business labeled as “Puerto Rican owned,” while shares are not evenly split. This has created mistrust between native Puerto Ricans and mainland American business owners. 

Shirley McPhaul, the director of Crypto Curious in San Juan, believes that regulatory issues are due to the disconnect of legislators and members of the local government failing to provide adequate attention to the middle class. 

“In the oligarchy of power, politicians are removed from the middle class,” said McPhaul. “A lot of political issues are direct issues from the colonial status. We dug the hole that we’re in right now.”

McPhaul has lived in Puerto Rico since she was 11-years-old, before having lived in Costa Rica. Now, she’s 5’11” and blonde, but still feels at home when she is walking on the streets, regardless of what others assume.

“I went to public schools,” said McPhaul. “I never stepped foot on a private school ever. I grew up with people who lived in public housing— people who controlled drug spots— and these people were my friends. I know that I lived in what the middle class in Puerto Rico lived through.” 

She accounts for the drastic economic disparities across the island. She notes that you can find every single stereotype on the social scale, and members of each community tend to stay in their own bubbles. 

In places like the secluded barrio Palmas Del Mar, residents are pleased to keep to themselves in their communities. There, they have everything they need, with no reason to leave; schools, supermarkets and restaurants included. McPhaul noted that the majority of people in that town are native Puerto Ricans.

“It’s like being in a different country almost, it feels like,” McPhaul said.

While people who live in gated communities, like Palmas Del Mar, are on one end of the social-economic spectrum, there are areas that are the complete opposite. Across the island, people are struggling to have a comfortable living situation following the various natural disasters.

“There are people that are currently living with electricity because our electric system is terrible,” said McPhaul. “There are people who still have blue tarps over their heads because the government hasn’t done their job since Hurricane Maria hit.”

These different experiences among people on the island make it harder for natives to collectively accept and understand the purpose of new technology and investment. According to McPhaul, some local Puerto Ricans feel apprehensive about the assumed “white savior” narrative. This occurs when wealthy mainlanders come to “save” the island that does not need saving. 

“There is mistrust because of our social-political context and a history of colonialism in Puerto Rico,” said McPhaul. “The fact that the first time that a lot of people have heard about crypto has been from individuals who have been associated with white colonialist mentalities.”

McPhaul uses crypto in her everyday life, as she pays with her CoinBase card; a simple, minimalist blue card that resembles an average debit card. It is connected directly to her crypto wallet. However, she adds that usage is limited across the island, and the response is early. 

“New technology is a way of empowering us to build the home we want to have,” said McPhaul. “All of these crypto people coming to the island, I see as an opportunity.”

Executive Director Keiko Yoshino works closely with McPhaul through the Puerto Blockchain Trade Association. The goal of the group is to educate and involve locals in cryptocurrency. They want people on the island to see the positive effects both crypto and investors can have. The two use Crypto Curious as the platform to offer easy and accessible knowledge to those who want to learn about the topic. 

“The adoption of cryptocurrency has not yet made it into stores,” said Yoshino.  “It’s not there yet. It’s still very minimal.” 

The popular tourist town Rincón has been criticized for the incorporation of crypto in local businesses, like The Chicken Shack BBQ food truck, which accepts six forms of cryptocurrency. However, the boom in crypto is not as large as it is being portrayed.

“From the portrayal of the media [Puerto Rico] is a crypto island, but no,” said Yoshino. 

According to McPhaul and Yoshino, El Salvador is the world’s current crypto hot spot. There, cryptocurrency has been adopted as a legal currency.  

McPhaul believes that most crypto investors that are coming into the island have an intention of creating a symbiotic relationship and hope to make Puerto Rico a better place alongside the locals. She feels that this is mostly being met with resistance and contempt.

“I think the xenophobia that has been shown at times on the island towards these people is absolutely awful,” said McPhaul. “In my opinion, I don’t think xenophobia has any place in society. I think it’s very backwards because of the knowledge transfer, we have all these people coming to the island with all this knowledge that they can teach us.”