The bitcoin (BTC)-keen El Salvador President Nayib Bukele has bet big on international crypto firms’ willingness to relocate to his country, opening the door for crypto companies to set up shop in the nation. And there are tentative signs that his much-hoped for crypto exodus has begun.
As regulatory pressure on crypto firms continues to rise in locations around the world, Bukele appears to be prepared to offer companies a safe space in which to operate without the threat of constantly moving regulatory goalposts. This appears to be his thinking behind the Bitcoin City project, which promises to fast-track residency permits for internationals and withhold all forms of tax except for a VAT charge on sales.
And it looks like Bukele has his very first taker, in the shape of an Argentine crypto firm named Lemon Cash. Per El Diario de Hoy, the firm has set up a Salvadoran offshoot named Lanin Pay, which allows it to be “exempted from reporting the movements of cryptoassets of its users” to tax bodies in Argentina. Lanin will handle crypto custody for the firm, but Lemon claimed that the move will not have any impact on its platform’s users.
In an email, the firm told its customers:
“None of these changes will impact how you use Lemon Cash on a daily basis. Your operations will not be affected in any way and you will be able to continue operating with [fiat] pesos and cryptocurrencies, totally as normal.”
The media outlet explained that as the custody of the crypto going through the platform is now being taken care of by a foreign firm, there was no longer any obligation on Lemon’s part to transfer data on customers’ crypto transactions to the Federal Administration of Public Revenues. All fiat and debit card transactions will still be subject to tax reporting, but as long as trade is done in crypto, the taxman appears to have been cut out of the picture.
Quite how the Argentine taxman feels about this move appears to be unclear at this stage. However, it appears that the move is not totally without precedent.