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 licence and an international financial institution’s permission have different scopes; they are not two names for universal authorisation.

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 licences, 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 authorise 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 licences alongside local securities rules. Its licensee register identifies the entity, category, number and status of permissions. Active digital asset money-transmission licences 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 licence before operating; its ninety-day regularisation 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 two routes must not be combined as if one licence indiscriminately covered custody, exchange and domestic or foreign clients.

International provision depends on the authorised service and the statutory classification of the client. Puerto Rican permission does not establish authorisation in the destination territory. Marketing, customer location, each entity's powers and federal or foreign requirements need examination; the word international does not establish a passport.

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 authorised under Act 273 section 10(10) expressly recognises digital assets within a financial function. This does not itself establish a special tokenized issuance regime or authorised 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 28 September, 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 1 October. Until onboarding, their applicable reporting mechanisms and obligations continue.

On taxation, Act 38-2026 amends resident-investor incentives: for applications from 1 January 2027 it provides, subject to its conditions, a 4% rate on interest, dividends and post-residency appreciation through 2055, unless more favourable 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 licence, 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 10 April 2023 characterises 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.