Digital asset regulation in Puerto Rico

In Puerto Rico, a business seeking to exchange, transmit or custody digital assets must select its regulatory route by service and customer. A money services license and an international financial institution’s permission have different scopes; they are not two names for universal authorization.

Tax incentives require separate analysis. A tax decree does not replace OCIF licensing, federal treatment or tokenized issuance documentation. Structure the project by first resolving activities, rights and customers, then their tax consequences.

How to distinguish licenses, customers and incentives in Puerto Rico

Act 136-2010 regulates money services, including receiving payment orders for transfer to a beneficiary for a fee. Circular CIF-CC-2021-03 explains its application to convertible-virtual-currency businesses, including bitcoin ATM operators. Assessment depends on the function actually performed; developing software, investing for one's own account and transmitting value for customers are different activities.

Puerto Rico's tax incentives do not remove federal regulation. FinCEN guidance FIN-2019-G001 requires examination of the business model to determine money services business, MSB, status. Federal registration addresses anti-money laundering obligations; it does not replace local licensing or authorize securities or derivatives transactions requiring additional permissions.

Which authority supervises each activity

The Office of the Commissioner of Financial Institutions, OCIF, administers money-services and international financial institution licenses alongside local securities rules. Its licensee register identifies the entity, category, number and status of permissions. Active digital asset money-transmission licenses evidence effective market access, but do not extend a licensee's powers to other products or group companies.

FinCEN, the Securities and Exchange Commission, SEC, and the Commodity Futures Trading Commission, CFTC, act according to the service and instrument. The United States guide develops this common framework. Authorities administering incentives and tax obligations have distinct functions: a tax decree does not establish prudential supervision, deposit insurance or permission to safeguard third-party funds.

Which permission the business model requires

Act 136, sections 3.2–3.4, requires an application, fitness, capital, liquidity and a bond for money transmission. These are distinct requirements: a guarantee does not replace own funds. OCIF's circular requires covered businesses to obtain a license before operating; its ninety-day regularization period related to 2021 and does not provide temporary permission for new operators.

Act 273-2012, sections 6 and 10, creates a separate route for international financial institutions. Section 10(10) contemplates digital asset and virtual currency custody under a special permit, with restrictions concerning domestic persons. However, section 11(8) prohibits these institutions from operating a digital asset exchange. The separation between the two routes is not merely a matter of interpretation: section 27 of Act 273 itself expressly provides that Act 136-2010 does not apply to international financial institutions. They are not two doors to the same permission, but two mutually exclusive regimes.

International provision depends on the authorized service and the statutory classification of the client. The license lists the permitted activities, and the institution may perform only those listed in it. Domestic person status is broad: it covers Puerto Rico residents, entities organized under its laws, entities with their principal place of business there and foreign entities with an office deemed to be doing business in Puerto Rico, as well as the Government and its instrumentalities. Puerto Rican permission does not establish authorization in the destination territory. Marketing, customer location, each entity's powers and federal or foreign requirements need examination; no passport should be inferred from the word "international."

How holder rights are documented

Uniform Securities Act 60-1963, article 301, requires registration of securities offered or sold, an applicable exemption or federal covered security status. Article 201 regulates registration of specified intermediaries and advisers. This legislation must not be confused with tax incentives under Act 60-2019: tax benefits do not resolve an offering's securities classification or distribution obligations.

A token representing debt, an ownership interest or an investment contract requires examination of its rights and economic terms. Recording a transaction on blockchain does not itself convey real estate or establish shareholder status. Documentation must identify the obligor, effectiveness of transfers, underlying asset formalities and treatment of rights on default or insolvency.

Custody authorized under Act 273 section 10(10) expressly recognizes digital assets within a financial function. This does not itself establish a special tokenized issuance regime or authorized trading infrastructure. Federal exemptions for particular transactions also require their conditions to be met; they do not extend automatically to every offering from Puerto Rico.

Which obligations continue during operations

Act 136, Chapter 3, addresses agent supervision, transfer liability, maintenance of resources and anti-money laundering and fraud controls. Assessment must distinguish who receives funds, controls assets and executes orders. MSB registration alone does not establish compliance by a particular product or a specific level of insolvency protection for customer assets.

Circular CIF-CC-2026-01, dated September 28, introduces FIRE for reporting to OCIF. The first phase covers identified institutions and others notified by the supervisor; remaining institutions join according to their communicated timetable. This does not mean all crypto providers had to use it from October 1. Until onboarding, their applicable reporting mechanisms and obligations continue.

On taxation, Act 38-2026 amends resident-investor incentives: for applications from January 1, 2027, it provides, subject to its conditions, a 4% rate on interest, dividends and post-residency appreciation through 2055, unless more favorable statutory treatment applies. It does not create a general 4% rate from 2026 or automatically extend every earlier decree at 0%. Pre-residency appreciation follows different rules.

Application depends on the decree, dates, residence and source of income. The IRS distinguishes presence, tax home and closer connection: counting days alone does not establish federal residence. The enacted text allows requests to amend certain earlier decrees; approval is not guaranteed. These incentives are explained for their practical relevance but do not contribute points to the regulatory index.

What to prepare before launching the project

Prepare a matrix linking each activity to the local license, special permission and potentially applicable federal duties. Explicitly identify which customers are domestic persons under the applicable statute and which services the entity may provide to them.

Separate tax and regulatory files and verify dates, conditions and approvals for any incentive. For daily operations, specify custody, agents, controls and the reporting timetable OCIF has communicated to the institution.

The Athena Bitcoin judgment of April 10, 2023, characterizes the circular as interpretative and reverses an administrative decision for procedural defects; it does not generally remove licensing requirements. Each project still requires confirmation of current permissions and conditions, token rights, eligible clients and individual tax treatment. The outcome of the fiscal oversight of Act 38 mentioned by DLA Piper in March was not confirmed; no automatic benefit is promised.

To understand how this framework applies to your project, discuss your case with our team.