Paraguay Paves the Way for Crypto Regulation Despite Internal Opposition

Paraguay is seen by many as a potential hotspot for cryptocurrency adoption due to low electricity costs and relatively low taxation. Th...



Paraguay is seen by many as a potential hotspot for cryptocurrency adoption due to low electricity costs and relatively low taxation. The government has recognized this opportunity by advancing new digital asset legislation.

On May 25, a bill regulating the trading, mining and custody of cryptocurrencies was approved by the Paraguayan Congress by 40 votes against 12. The bill must now be ratified by the Senate to finally reach President Mario Abdo Benítez.

If ratified, the bill will apply to any person or organization in Paraguay involved in the mining, marketing, trading, transfer, production, custody or administration of cryptocurrencies and related functions. The legislation provides financial and legal safeguards to businesses and individuals, while imposing restrictions on electricity spending and taxation.

For example, a translation of Article 11 of the bill states: “Crypto mining is recognized as an industrial and innovative activity. This activity will benefit from all the mechanisms and incentives provided for in national legislation”

The settlements did not come without resistance, however; the Central Bank of Paraguay and the budget commission have Express their disapproval of digital currencies, calling the move “a high-risk project with no benefit to the state.” This statement was also accompanied by the usual suspicion that cryptocurrencies help criminal enterprises and considerably increase electricity costs.

Related: Latin America’s largest digital bank to allocate 1% to BTC and offer crypto investment services

Paraguay is one of many latin american countries actively explore the regulation of digital assets. El Salvador started the trend towards legalization in June 2021 by recognizing Bitcoin (BTC) as legal tender. Other countries with ongoing discussions about crypto regulation include Brazil, Argentina, Uruguay, and Panama.