Many see Paraguay as a hot spot for cryptocurrency adoption because of its low electricity costs and soft taxation. This opportunity has been recognized by the government, who have introduced new legislation regarding digital assets.
The Paraguayan Congress approved a bill to regulate cryptocurrency trading, mining, and custody on May 25 by a vote of forty to twelve. To reach President Mario Abdo Benitez, the bill must be ratified now by Senate.
Aprueban con modificaciones proyecto que regula la industria y comercializacion de criptoactivoshttps://t.co/[email protected] @DipNacBuzarquis @CelsoKennedy @tadeorojasm @bachinunez_nuez @luchozacariasAP @carlitosrejala pic.twitter.com/AlQ0Dh914S
— Camara de Diputados (@DiputadosPy) May 25, 2022
The bill, if ratified by the Paraguayan legislature, would be applicable to all individuals or organizations involved in mining, commercialization and trading, transfer, production or custody of cryptocurrencies or related functions. The legislation provides financial and legal protections for individuals and businesses, as well as restrictions on electricity taxation and spending.
Article 11 of the bill, for example, states that “Cryptomining is an industrial and innovative activity.” This activity will benefit from all incentives and mechanisms provided for in the national legislation.
Regulators were not met with resistance. The Paraguayan Central Bank as well as the budget commission expressed disapproval of digital currency and called it a “high risk project with no benefits for the state” and said that they are “high-risk projects with no benefit to the state.” They also suspected that cryptocurrencies help criminal enterprise and significantly increase electricity prices.
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Paraguay is just one of many Latin American countries that are actively looking into the regulation of digital assets. El Salvador started the trend towards legalization in June 2021 when it recognized Bitcoin (BTC), as legal tender. Brazil, Argentina and Uruguay are also involved in ongoing discussions about crypto regulation.