Nearly six months after Hurricane Maria decimated Puerto Rico, thousands of crypto enthusiasts have descended upon San Juan for a string of blockchain and crypto conferences that the island's government is hoping will finally give the struggling economy the boost it needs.
Puerto Rico's financial woes have been well-telegraphed. After a decade of recession, it is restructuring a large portion of its $73 billion in outstanding debt in the largest U.S. municipal bankruptcy. The storm, a nearly Category 5 hurricane, dealt the commonwealth another massive blow in September, and the damage threatened to set the island back even more.
But many blockchain companies are now looking at Puerto Rico as a viable hub for the rapidly growing crypto industry. The island's government has offered attractive tax incentives, seeing a unique opportunity to help boost its depressed economy.
"Before the natural disaster, the hurricane, we were already targeting Puerto Rico to become a world leader — not only a regional leader, but a world leader — in export services and technology," said Manuel Laboy, the secretary of Puerto Rico's Department of Economic Development and Commerce. "That was part of the vision that Gov. (Ricardo) Rossello has for Puerto Rico," he said in an interview with CNBC.
Laboy also unveiled on Thursday an initiative to form an advisory council to focus on developing blockchain businesses on the island.
On Wednesday, the economic development department and a company called Blockchain Industries kicked off a three-day conference called Blockchain Unbound at The Condado Vanderbilt, a luxury beachfront hotel that is owned by the founder of the hedge fund Paulson & Co.
The sold-out event attracted a diverse group of around 800 people — representatives of blockchain start-ups, cryptocurrency investors, hedge-fund managers, bankers and accountants from all across the U.S.
Patrick Moynihan, the CEO of Blockchain Industries, said blockchain is not merely a technology, it is a movement led by individuals who not only want to boost their bottom lines but also make a difference.
"This is really about awareness," Moynihan said in an interview with CNBC. "There's a social movement here. People want to help, and this is a way to really give back to their fellow citizens across the globe, quite frankly, and equalize the playing field," he said.
All proceeds of the Blockchain Unbound conference are being donated to the island's hurricane recovery effort.
Puerto Rico has been attracting companies and individuals to the island mainly through two sets of tax exemptions. One gives businesses an incentive to relocate to the island and use Puerto Rico as a place to export services to anywhere in the world, including the U.S. mainland. The other encourages individuals to move to Puerto Rico by eliminating taxes on long-term capital gains if they invest locally.
Since the tax exemptions were enacted, more than 800 businesses and about 1,400 individuals have relocated to Puerto Rico.
Jeff Thompson, 53, a conference attendee, is the president and CEO of Red Cat, a drone storage and analytics software business that uses blockchain technology. He moved his business to the island in September 2016.
"This is one of the best places to put a start-up company," Thompson said. "The tax incentives are incredible for a start-up. The talent down here is incredible."
Thompson estimates that about 30 blockchain companies have moved to the island recently.
"Some of the most prominent names in blockchain are here," he said. "It's a really exciting time here in Puerto Rico."
However, there are still some obstacles that some crypto entrepreneurs are facing on the island. Local banks have taken a cautious approach to opening bank accounts for individuals that have a business related to the cryptocurrency industry.
Bruce Deichl, the president of a Humacao, Puerto Rico-based business called Tax Credits International, which sells tax credits for the movie industry, flew to New York in February to try to get answers about the issue from Laboy.
Laboy was speaking at an investor conference at the time. He had just been made aware of the issue and told Deichl he was setting up a meeting with the head of the banking commission of Puerto Rico to try to rectify it.
The issue is still not resolved, but Deichl says he remains optimistic. "I'm confident the industry will find a proper way to work with the system, as this industry is so critical to the rebuilding of Puerto Rico."
With nearly every hotel in the San Juan metro area completely sold out and the streets, restaurants and bars filled with thousands of eager potential investors, the question remains whether the government can take full advantage of the opportunity.
"We are welcoming with open arms blockchain technology to Puerto Rico because we know there is a huge potential for the island," Laboy told CNBC. "But at the same time we want to make sure that we have the right processes, that we have the right legal framework, and the regulatory process to ensure that everything is done right and that we protect the name of Puerto Rico," he said.