Paraguay crypto bill takes a step closer to becoming law

Cryptocurrency regulation is making headway in Paraguay, where a crypto bill has recently been approved for advancement by the country’s Chamber of Deputies. It’s now set to be passed to the Senate to be discussed. 

First introduced in July 2021, the bill seeks to regulate virtual assets and their associated commercial activities, such as crypto exchanges. It also sets out a legal framework for bitcoin mining, which includes licensing and monitoring mining companies.

The proposal does not, however, make mention of adopting any digital currency as legal tender. 

If the new laws are passed, trading platforms and crypto custody firms will be required to register with SEPRELAD, Paraguay’s money-laundering watchdog. Peer-to-peer traders will also need to make themselves known to the secretariat, as the rules apply to people as well as companies. 

According to the bill’s first article, regulation of the crypto sectors is needed “to guarantee legal, financial and fiscal security to the businesses derived from their production and commercialization.” 

Despite some opposition from the Central Bank of Paraguay (BCP), the crypto regulation bill saw a 40 to 12 vote in favour of moving it forward from the country’s deputies. 

Back in March, the bank commented that it was uncertain whether the pros of creating this legal framework outweigh the cons. It cited “electricity consumption, loss of reputation, and costs for the financial system” as potential risks of digital asset regulation. 

The BCP also criticized the high-risk nature of crypto investments and the false sense of security they provide. 

However, the new bill’s proposed changes to cryptocurrency mining are garnering more positive attention. 

Paraguay has traditionally been seen as a haven for miners, as companies operating in the space have enjoyed the cheap electricity costs. Now, lawmakers have outlined definitions and rules for crypto mining in a bid to bring more clarity to the industry.

This also involves regulating matters concerning energy usage and the tariffs that will be collected by the government. If the bill passes, these responsibilities will be transferred to the country’s National Electricity Administration (ANDE), which is tasked with enforcing the new mandated power rates. Paraguay’s crypto miners will not be able to exceed 15 per cent of the industrial rates.

The regulatory bill is now headed to the nation’s Senate, which will have three months to assess and propose changes to the document. If it’s again approved for advancement, it will be brought before the higher government for presidential sanction.