Following the approval of Bitcoin as legal tender in El Salvador and the Central African Republic, other countries, such as Paraguay, are rushing to follow up and adopt legislation for this unique asset class.
Latin American countries are taking cryptocurrency more seriously and working to establish legal and regulatory frameworks.
Paraguay has long been regarded as a mining sanctuary for cryptocurrency mining operations due to its low power costs and “crypto-friendly” climate.
The Chamber of Deputies of Paraguay endorsed a measure to regulate cryptocurrencies on Thursday, despite opposition from the country’s central bank. In a majority vote, Paraguay passes a crypto bill. Deputies voted 40 to 12 for the updated legislation.
Despite the Senate’s original adoption of the bill in December 2021, the Chamber of Deputies’ latest amendments will need the Senate to revisit the document before it can be sent to the president.
The measure, first introduced in the Paraguayan Senate in July 2021, attempts to regulate digital asset commercial activities. This entails approving and monitoring bitcoin mining operations in the country. Cryptocurrencies are not legal tender under the proposed law.
Furthermore, because of the country’s cheap power costs, which are under five cents per kilowatt-hour, the lowest in Latin America, this move aims to make Paraguay a worldwide centre for miners.
The new regulation compels bitcoin exchanges to register with Paraguay’s anti-money laundering agency as virtual asset service providers.
“The goal of this law is to control the production activities and commercialisation of virtual or crypto assets in order to provide legal, financial, and fiscal security to the firms that profit from their production and commercialisation.”
Individual and corporate miners will be obliged to apply for a licence and obtain authorisation for industrial power use if the legislation becomes law.
The proposed law also establishes a registry for anybody or legal entity that wants to provide crypto trading or custody services to other parties. However, it excludes the concept of exchange.
In 2020, around half of Paraguay’s fintech firms accepted digital payments and new financial services for businesses and consumers.
In addition, 30% offered financial institutions crowdfunding services and technology. According to Statista statistics, just 8% of new businesses used cryptocurrency.
