Thursday, July 19, 2018

Puerto Rico: the Caribbean paradise for techno and cryptocurrencies?

By on March 26, 2018

Editor’s note: The following article originally appeared in the March 22-28 print edition of Caribbean Business.

SAN JUAN — Following the devastation left by hurricanes Irma and Maria, many individuals and businesses want to make Puerto Rico the Caribbean paradise for technological and cryptocurrencies to aid in the island’s recovery.

While blockchain technology companies can be recruited through tax incentives provided by Acts 20 and 22, the question still remains about what would be the regulatory framework for cryptocurrencies.

At the recent Blockchain Unbound conference in San Juan, two sources told Caribbean Business about Blockchain Industries’ plans to create a form of local financial institution to work with cryptocurrency transactions.

(File Photo)

Some individuals questioned the possibility of Puerto Rico becoming a crypto-paradise at all. Government officials noted that as is the norm in jurisdictions regulated by federal laws, Puerto Rico banks cannot use cryptocurrencies and must wait for instructions from their regulators.

Financial Institutions Commissioner George Joyner said he is trying to develop regulations or rulings to determine how to treat cryptocurrencies. He appears inclined to treat them as securities, as is the opinion of the Securities & Exchange Commission, because they constitute an investment in money.

Raúl Vidal, a partner at Omnia Economic Solutions, told Caribbean Business he believes language in Act 273, the International Financial Center Act, is broad enough to allow for the creation of a financial institution dealing with cryptocurrencies. The law aims to expand banking services to turn Puerto Rico into an international financial center.

“When you go through that law, you present a business plan and declare whether or not you will accept cryptocoins. However, it is up to the Financial Institutions commissioner to determine if the law allows it,” he said, adding that he has clients waiting for the commissioner’s regulations.

A lawyer consulted by Caribbean Business was of the opinion that the wording in the Cooperatives Act does not prevent cooperatives, which are regulated locally, from dealing with cryptocurrencies. Cooperatives already are the only financial entities that allow medical cannabis businesses to open accounts with them.

Read the rest of this article in Caribbean Business’ epaper here.

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