The government of Paraguay has introduced a new bill for crypto and digital assets regulation despite internal rejection from the central bank and the budget commission.
Due to low electricity prices and relatively lenient taxation, many see Paraguay as a possible hotspot for bitcoin adoption. The government has taken advantage of this opportunity by introducing new regulations governing digital assets.
The Paraguayan Congress approved a measure on May 25 that governs cryptocurrency trading, mining, and custody by a vote of 40 to 12. The bill now needs to be adopted by the Senate before it can be sent to President Mario Abdo Bentez.
If enacted, the measure would apply to anybody in Paraguay who is involved in cryptocurrency mining, commercialization, trading, transfer, manufacturing, custody, or administration, as well as associated tasks.
The proposal proposes financial and legal protections for enterprises and individuals, as well as spending and taxes constraints on electricity.
“Crypto mining is recognized as an industrial and inventive activity,” according to a translation of article 11 of the bill. This effort shall be supported by all channels and incentives outlined in national legislation.”
The Paraguayan Central Bank and the budget committee have both stated their disdain for digital currencies, calling them a “high-risk project with little benefit to the state.”
This comment was backed by the customary fear that cryptocurrencies promote criminal activity and drive up electricity costs significantly.
Paraguay is one of several Latin American countries experimenting with digital asset regulation. In June 2021, El Salvador became the first country to recognize Bitcoin (BTC) as legal money. Brazil, Argentina, Uruguay, and Panama are among the countries that are now debating crypto policy.