Paraguayan President vetoes law regulating crypto assets

The president of Paraguay, Mario Abdo Benítez, objected on Monday, August 29, to a bill that seeks to recognize cryptocurrency mining as an industrial activity and consequently establish a percentage to fix the consumption rate, among other provisions referring to the commercialization, custody, and administration of crypto assets.

Abdo Benítez “totally” vetoed the initiative by employing a decree.

Both chambers will again discuss the bill, which will have to decide between initial approval or whether to accept the Executive’s veto.

“The legislative proposal intends to recognize crypto asset mining as an industrial activity,” reads the decree.

In addition, it refers to the document endorsed by Congress seeking to establish that the crypto asset mining rate “does not exceed” 15% of the current industrial rate.

Likewise, it grants permits for up to five years in favor of service providers and crypto asset miners, creating a specialized agency and establishing sanctions, among other measures.

The decree states, citing the National Administration of Electric Energy (Ande) concept, that crypto assets mining “is characterized by its high consumption of electric energy, with intensive use of capital and scarce use of labor”.

For this reason, it is appropriate to characterize crypto assets mining “as electro-intensive consumption and not as industrial consumption, since it does not generate added value”.

In the same vein, the Ministry of Industry and Commerce warns in the decree that the activities intended to promote the bill require “a significant amount of energy that may compromise the development and expansion of an inclusive and sustainable national industry”.

It even warns that if Paraguay wants to intensify crypto mining today, “it will be forced to import electric power” in the next four years.

In turn, the Paraguayan Central Bank (BCP) points out that cryptocurrencies “are not backed by any monetary authority and, therefore, their custody is not supervised”.

Nor do they have protection or security mechanisms as other assets do. The issuer adds that “crypto assets do not fulfill basic money functions and constitute high-risk investments”.

With information from EFE