Act 60 and Crypto: What the Decree Covers — and the Plan the IRS Has a Name For

Act 60's individual investor decree covers crypto gains that accrue after you become a bona fide resident of Puerto Rico — 0% for applications filed through December 31, 2026, 4% after. It does notcover pre-move appreciation, and the "sell everything and rebuy once you land" plan sits at the center of an active IRS examination campaign. Three questions sort every coin: when the gain accrued, where you were resident when it accrued, and what kind of income it is.

Does Act 60 make crypto gains tax-free?

For gains that accrue after residency begins — yes, at the decree rate. Puerto Rico–source capital gains earned by a bona fide resident are excluded from U.S. federal tax under IRC §933, and the decree reduces Puerto Rico's own tax to 0% for applications filed on or before December 31, 2026, or 4% after (the 2026 changes). The statute treats crypto like any other covered asset — same rules as securities, covered on the tax benefits guide. All of it is conditional on residency holding every year, and the rate does not reach back in time. Which is where the plan goes wrong.

What happens to gains from before the move?

Appreciation that built up before you became a resident generally stays U.S.-source if you sell within ten years of the move (the Treas. Reg. §1.937-2 framework) — subject to U.S. federal tax no matter what the decree says. Puerto Rico taxes those pre-move gains at 10% inside the ten-year window and 5% after it. Only appreciation after the residency start date gets the decree's 0% or 4%.

For a long-held position, that split can be most of the value — and the clock starts at the move, not at the decree or the next sale. That makes the valuation of holdings as of the residency start date the most load-bearing number in a crypto holder's file: every sale within the window gets split against it.

Why doesn't selling and rebuying in Puerto Rico reset the clock?

The folk fix — land, sell everything, immediately rebuy, call the clock reset — is the specific fact pattern the IRS has addressed: it has said it will not accept move-and-immediately-sell as converting pre-move U.S.-source appreciation into Puerto Rico–source income. The entity variant — dropping appreciated coins into a pass-through and selling after the move — is directly addressed in IRS memo AM 2024-005, with a 2025 chief counsel advice, CCA 202538025, following it. Nor is this only a paper position: 2025 produced a guilty plea involving roughly $30 million in shielded gains, built on backdated documents and misrepresented residency. The rules reward patience and dates; the campaign targets the reset.

Is the IRS actually examining Act 60 crypto holders?

Yes — the IRS's Large Business & International division runs an active examination campaign covering Act 60 residency and sourcing, and crypto concentrates both of its questions: when did the gain accrue, and where was the taxpayer resident when it did. What an exam asks for, and how targets get selected, is in the audits guide — sourcing positions on pre-move crypto appreciation are exactly the claim the campaign exists to test.

What does the annual DDEC report ask crypto holders to disclose?

More than most holders expect. Annual reports filed with DDEC have begun requesting wallet addresses, transaction histories, and asset holdings from crypto holders. The decree comes with visibility, not privacy, and the disclosure lands inside the ordinary annual compliance cycle. In practice that changes what "keeping records" means: not a year-end tally reconstructed from exchange exports, but a transaction history complete enough to hand over — telling the same sourcing story on the DDEC filing and the federal one.

Is staking income covered at 0%?

Nobody can tell you today, and this page won't pretend otherwise. Staking's treatment under the decree is genuinely unsettled— no published guidance resolves how staking rewards fit the decree's categories, and anyone stating a covered-at-0% answer is guessing ahead of the guidance. The honest sort puts staking in its own bin: unsettled, and said so.

How does the sort come out?

Post-move gains — covered, 0% or 4% by filing date. Pre-move appreciation — taxed, U.S.-source on a ten-year clock that does not reset, with Puerto Rico taking 10% inside the window and 5% after. Staking — unsettled. And the whole structure rests on residency holding up every year, the part the examination campaign tests first.