Paraguay’s cryptocurrency regulatory framework is one step away from becoming law
RIO DE JANEIRO, BRAZIL – The Paraguayan Senate on Thursday approved a bill that establishes a fiscal and regulatory framework for companies operating in the cryptocurrency and crypto mining sector.
The bill, presented last July by Senator Fernando Silva Facetti and approved in Congress in May before reaching the Senate, calls for the formation of the Ministry of Industry and Commerce (MIC) to supervise industry service providers of cryptocurrencies. The project is now one step away from being ratified into law by President Mario Abdo Benítez.
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A notice from Congress in May noted that the bill specifically refers to cryptocurrency mining, trading, brokering, exchanging, transferring, custody, and/or managing crypto assets or instruments that allow control of crypto assets.
Local outlet ABC reported on Thursday that companies operating in the cryptocurrency sector will receive the same tax treatment as those engaged in securities. Consequently, they will be exempted by the Undersecretary of State for Taxation from paying a value added tax (VAT), but will be included in the income tax regime.
The bill reportedly considers how cryptocurrency miners should interact with local energy providers. Potential mining operations will be required to report their energy consumption schedule to the National Electricity Administration (ANDE), Paraguay’s national electricity administrator. If miners are found to be consuming more electricity than expected, ANDE may cut off their supply.
Although the bill stipulates that energy costs for miners will be subsidized, they will pay a rate 15% higher than other industries.
Senator Facetti reportedly said that modifications made to the project in the last year “improved the original project.”
Some critics of the bill, such as Senator Enrique Bacchetta, stated that while the regulation of the cryptocurrency industry would lead to higher profits, he questioned whether it would actually create jobs for his fellow citizens. Senator Esperanza Martínez seconded Senator Baccetta’s concerns, stating that the miners’ rate of energy consumption far exceeds the number of jobs they would create.
This makes Paraguay the latest nation in LATAM to increase the adoption and regulation of cryptocurrencies. El Salvador adopted bitcoin (BTC) as legal currency in 2021, and the governments of Brazil, Argentina, and Panama are working on their own cryptocurrency legislation.
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